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Blackstone's Schwarzman snags $702.4 million

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Over the past couple years, it's been horrible for the private equity sector, right? Well, not so for the head of the Blackstone Group (NYSE: BX), Steve Schwarzman. According to the Corporate Library -- which put together a top 10 list for the highest paid executives for 2008 -- he was first on the list. The second was Oracle's (NASDAQ: ORCL) Larry Ellison, with $543 million.

When you add up all the sources of income (cash/bonus, stock options and restricted shares), the compensation for Schwarzman comes to $702.4 million. Just imagine if the market was stronger.

However, there are some things to keep in mind. First of all, Schwarzman is the co-founder of Blackstone, which he helped to start in the late 1980s. Interestingly enough, the first few years of the firm's existence were particularly rough.

Next, Blackstone was able to avoid the problems of the subprime implosion and as a result, has a strong balance sheet. There was no need for a TARP bailout. In fact, Blackstone has $15 billion in fresh capital to do deals.

Finally, nearly $700 million of Schwarzman's pay came from vested stock grants. Again, this is a reflection of the fact that he was the co-founder of Blackstone.

True, it is still significant wealth. But, when you take a risk on a new venture -- and an innovative business model -- you should reap the rewards.

Tom Taulli is the author of various books, including The IPO Primer and The Complete M&A Handbook.

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Last updated: November 26, 2009: 09:44 AM

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