His sudden exit, announced late Sunday, follows tensions with the company’s old guard and a stretch in which Carlyle’s shares trailed its peers. Co-Founder Bill Conway, currently the non-executive co-chairman, will step in as interim CEO during the search for a successor.
Lee, 56, took over as the sole boss in September 2020 after a power tussle that led to co-chief executive Glenn Youngkin’s departure. Now, Lee’s exit has come as a surprise to many executives, too. With his five-year employment agreement due to expire at the end of the year, Lee and board directors clashed over his contract in recent discussions, said a person familiar with the matter.
For all of the private equity industry’s attempts to tout its prowess at fixing and reshaping companies, many firms have struggled to navigate a smooth transfer of leadership and shake off the hallmarks of their founders.
Lee had been trying to diversify revenues, make profits less tied to markets’ boom-and-bust cycles and lift Carlyle’s stock price.
His departure creates new uncertainty for Carlyle just as the Federal Reserve’s moves to raise interest rates are roiling markets and snarling deal activity that private equity firms rely on to generate profits.
In his aggressive attempts to remake the firm, Lee -- a former Warburg Pincus dealmaker who joined Carlyle in 2013 -- made changes that at times put him at odds with the old guard. He tried to knit competing factions and restructure teams to make deal makers work more closely together. He also staffed the top ranks with new faces and tried to shift the Washington-based firm’s power center toward New York. Carlyle posted a 34% increase in distributable earnings in the second quarter, as it grew its credit business and boosted fee streams.
Shares of Carlyle dropped as much as $2.38 to $35.58 in New York. They were already down more than 31% this year, underperforming rivals including Blackstone Inc. and Apollo Global Management Inc.
At the start of 2022, Carlyle bumped Lee’s base salary more than threefold to $1 million. The firm said in a Monday filing that Lee would receive severance benefits laid out in his employment and equity award agreements. The vesting of Lee’s performance-based restricted stock unit awards, the firm added, “will be based on actual performance results measured through the end of calendar year 2022."
A newly formed search committee will help find a permanent successor, Carlyle said. The company also formed a CEO office to assist Conway and make a “seamless transition" once a replacement has been identified.
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