A Wall Street pay cut: JP Morgan’s Cavanagh to earn $7M a year at Carlyle Group


Wall Street bigwig Michael J. Cavanagh, who announced this week that he is leaving JPMorgan Chase to become co-president of the Carlyle Group, is taking a $10 million annual paycut. (Gary Cameron/Reuters)

Wall Street bigwig Michael J. Cavanagh, who announced this week that he is leaving JPMorgan Chase to become co-president of the Carlyle Group, is taking a $10 million annual paycut.

But don’t pull out the sympathy cards for the 48-year-old banker, once considered a protege of JPMorgan chairman Jamie Dimon.

His new job at Carlyle comes with an annual $7 million in salary, bonuses and stock grants from now through 2016, according to a filing that the District-based private equity firm made Friday with the U.S. Securities and Exchange Commission.

Carlyle’s pay package with Cavanagh calls for an annual base salary of $275,000, plus a year-end bonus of $2,725,000. He also will receive a signing bonus of $2 million each year. On top of that, each year he will get a stock grant of $2 million, which vests over five years.

While that is substantially less than the $17 million the banker made last year at JPMorgan, Carlyle is creating an incentive plan for Cavanagh and two other top executives, which gives them an equity stake that presumably could eventually make them even more eye-poppingly wealthy.

The new plan, called the Key Executive Incentive Program, which is starting this year, for now applies only to Cavanagh, co-president Glenn A. Youngkin and chief financial officer Adena Friedman.

A Carlyle spokesman declined comment.

The filing said Cavanagh and Youngkin will each get .5 percent of the firm’s profits from Carlyle’s investment portfolio. Friedman will receive .1 percent.

According to the filing, Cavanagh apparently is walking away from approximately $30 million in stock at JPMorgan, where he has been its co-chief executive at its corporate and investment bank.

Cavanagh, who starts this summer and will be based in New York, will receive a “make whole” award of 933,416 shares of Carlyle stock, known as units, which will vest in thirds over the next three years.

At Carlyle’s current share price, those shares are worth around $30 million, roughly the value of the shares Cavanagh is walking away from.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade.
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