I've been bearish on The Blackstone Group (NYSE: BX) as a public company since before the IPO for two reason: 1) the IPO had all the hallmarks of a classic top of the market cashout for insiders, and 2) the company had poor corporate governance, leaving insider Stephen Schwarzman in what amounted to complete control of everything, with the shareholders at his mercy.
In The Wall Street Journal, George Anders reports (subscription required) on just how much of a corporate governance chamber pot Blackstone is: "Blackstone's top executives set their own pay, without the checks and balances -- sometimes perfunctory, sometimes real -- set up by other public companies."
Blackstone has no compensation committee, so partners Schwarzman and co-founder Peter Peterson make their own pay decisions.
Perhaps this explains how Schwarzman earned $350 million in 2007, in spite of the evaporation of more than $4 billion in market value since the company's IPO in June.
I know that a lot of investors are looking at Blackstone anew now that is dipped down to the $16 per share range. But without good corporate governance -- or any meaningful corporate governance -- I would still be skeptical about the company.
It's also disappointing that the New York Stock Exchange provides a market for companies that are run for their benefit of their insiders, not their shareholders.
Blackstone chiefs pay themselves first
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