In the days leading up to his 57th birthday on Friday, Kewsong Lee was growing uneasy. The now ex-CEO of the Carlyle Group had proposed a $300 million pay package months earlier that would cement him as one of the most powerful figures in finance for the next half decade.
The Korean-American businessman played the role of Wall Street titan, while privately harboring growing doubts. Their bosses, the three billionaire septuagenarian founders of Carlyle, had not responded to the nine-figure pay game; Lee felt his situation was becoming untenable, close confidants said. He thought his days were numbered.
On Sunday, the trio, David Rubenstein, Bill Conway and Daniel D’Aniello, finally showed Lee the door, not even wanting to discuss his proposal. It brought down one of the world’s largest private equity firms and wiped more than a billion dollars off its market value.
The chaotic exit revealed deep fissures within Carlyle, once nicknamed “the ex-president’s club”: The firm had for years operated as a revolving door between the world’s political and financial elites, formerly featuring George HW Bush and John Major as advisors.
But a company that established its dominance by forging political connections in the Washington, DC club world three decades ago has been overtaken by more aggressive New York rivals such as Blackstone, KKR and Apollo, and doesn’t seem to know how to adapt .
In almost any other business, a $300 million payout request would seem both audacious and tone-deaf when ordinary workers are facing hardship. But Lee’s was a stock-based deal that would reward him if he could restore Carlyle to its former glory. And their rewards were far less than rival companies.
Carlyle’s rejection was, in the end, about power rather than money. “He wanted complete autonomy,” said a person close to the situation. “The founders gave it to him. Then they took him away.”
The younger Lee grew up in Schenectady, New York, an industrial town three hours north of Manhattan, where his father taught economics at a state university. His parents taught him the piano from the age of four; later he took up the violin.
As a teenager, he won a scholarship to Choate Rosemary Hall, the elite boarding school in Connecticut where John F Kennedy studied. At Harvard he met Zita Ezpeleta, his wife of three decades, with whom he has two children.
In his twenties, Lee joined the private equity firm Warburg Pincus, considered by many to be the elegant elder statesman of the buyout industry, where he led many lucrative deals.
He made “a big mistake,” says a former colleague. He was the key figure behind Warburg Pincus’ costly decision in 2007 to invest in MBIA, an insurer hit hard by the subprime mortgage crisis.
In 2013, Lee had not been given an executive role at Warburg. Conway, the architect of Carlyle’s private equity business, recruited him as a top lieutenant. It was a key moment. Carlyle had gone public and needed to grow quickly.
Externally, the company maintained an aura of power, bolstered by its proximity to Washington: Its headquarters are within walking distance of the White House, and Rubenstein had close ties to the Obama administration. Carlyle had bought stakes in defense and aerospace companies during the Bush years, played as villains in filmmaker Michael Moore’s Fahrenheit 9/11.
But internally, it became chaotic. The founders, billionaires after Carlyle went public in 2012, pulled in different directions and the company made bad acquisitions and launched niche products that struggled to break even.
In 2017, Carlyle shares had fallen below their share price. Its founders dedicated themselves to philanthropy. Lee and Glenn Youngkin, a popular 20-year veteran, were named co-CEOs.
Lee seized the opportunity, taking charge of Carlyle’s purchases and credit investments, while Youngkin handled smaller operations. “He made a brilliant strategic decision on the first day,” said a contemporary.
But consolidating his power made Lee enemies. “He was constantly working to become CEO and then oust Youngkin,” says another former colleague. “I wanted to know if you were on board with this program.”
Still, he prevailed, becoming sole chief executive when Youngkin, now the Republican governor of Virginia, left in 2020. But Lee still had a difficult task, navigating the sometimes conflicting wishes of co-founders who hadn’t left the all. “On strategic matters they were a two-headed monster,” said one former adviser.
Lee also managed Carlyle’s dual identity. The company splits its headquarters between Washington, its historic energy center, and New York, the epicenter of finance. This geographic and symbolic gap widened during the pandemic. From New York, Lee had some success combining subscale companies and hired new leaders, while pushing Carlyle into credit, real estate, and insurance investments; he tried to replicate much of what made Blackstone a giant.
Ultimately, his failed hire revealed that the old guard in Washington was not on his side. For one insider, he highlights the company’s identity crisis: “The center of gravity of the company has migrated north, but not necessarily the center of power.”
antoine.gara@ft.com; kaye.wiggins@ft.com
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