BLACKSTONE INC. For more information concerning the revenues and fees we derive from our business segments, see "- Fee Structure/Incentive Arrangements."
Real Estate
Our Real Estate business is a global leader in real estate investing, with
Our
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focusing where we see outsized growth potential driven by global economic and demographic trends. BREP has made significant investments in logistics, office, rental housing, hospitality and retail properties around the world, as well as in a variety of real estate operating companies.
Our Core+ strategy invests in substantially stabilized real estate globally
primarily through perpetual capital vehicles. These include our (a)
Our Blackstone Real Estate Debt Strategies ("BREDS") vehicles primarily target
real estate-related debt investment opportunities. BREDS invests in both public
and private markets, primarily in the
Private Equity
Our Private Equity segment encompasses global businesses with a total of
approximately 590 employees managing
We are a global leader in private equity investing. Our corporate private equity
business pursues transactions across industries on a global basis. It strives to
create value by investing in great businesses where our capital, strategic
insight, global relationships and operational support can drive transformation.
Our corporate private equity business's investment strategies and core themes
continually evolve in anticipation of, or in response to, changes in the global
economy, local markets, regulation, capital flows and geopolitical trends. We
seek to construct a differentiated portfolio of investments with a well-defined,
post-acquisition value creation strategy. Similarly, we seek investments that
can generate strong unlevered returns regardless of entry or exit cycle timing.
Tactical Opportunities pursues a thematically driven, opportunistic investment strategy. Our flexible, global mandate enables us to find differentiated opportunities across asset classes, industries, and geographies and invest behind them with the frequent use of structure to generate attractive risk-adjusted returns. With a focus on businesses and/or asset-backed investments in market sectors that are benefitting from long term transformational tailwinds, Tactical Opportunities seeks to leverage the full power of Blackstone to help those businesses grow and improve. Tactical Opportunities' ability to dynamically shift focus to the most compelling
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opportunities in any market environment, combined with the business' expertise in structuring complex transactions, enables Tactical Opportunities to invest behind attractive market areas often with securities that provide downside protection and maintain upside return.
Blackstone Life Sciences is our investment platform with capabilities to invest across the life cycle of companies and products within the life sciences sector. BXLS primarily focuses on investments in life sciences products in late stage clinical development within the pharmaceutical and biotechnology sectors.
Blackstone Growth is our growth equity platform that seeks to deliver attractive risk-adjusted returns by investing in dynamic, growth-stage businesses, with a focus on the consumer, consumer technology, enterprise solutions, financial services and healthcare sectors.
Credit & Insurance
Our Credit & Insurance segment, with approximately 620 employees and
BXC is organized into two overarching strategies: private credit and liquid
credit. BXC's private credit strategies include mezzanine and direct lending
funds, private placement strategies, stressed/distressed strategies and energy
strategies (including our sustainable resources platform). BXC's direct lending
funds include
Our Credit & Insurance segment also includes our insurer-focused platform,
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In addition, our Credit & Insurance segment includes our asset-based finance
platform and our publicly traded midstream energy infrastructure, listed
infrastructure and master limited partnership ("MLP") investment platform, which
is managed by
Hedge Fund Solutions
Working with our clients for more than 30 years, our Hedge Fund Solutions group
is a leading manager of institutional funds with approximately 275 employees
managing
Each of our business segments currently includes
Private Wealth Strategy
Blackstone's business has historically relied on the provision of investment
products, such as traditional drawdown funds, to institutional investors. In
recent years, we have considerably expanded the number and type of investment
products we offer through various distribution channels to certain mass affluent
and high net worth individual investors in the
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Investment Process and Risk Management
We maintain a rigorous investment process across all of our investment vehicles. Each investment vehicle has investment policies and procedures that generally contain requirements, guidelines and limitations for investments, such as limitations relating to the amount that will be invested in any one investment and the types of assets, industries or geographic regions in which the vehicle will invest, as well as limitations required by law.
Our investment professionals are responsible for selecting, evaluating, underwriting, diligencing, negotiating, executing, managing and exiting investments. For those of our businesses with review committees and/or investment committees, such committees review and evaluate investment opportunities in a framework that includes a qualitative and quantitative assessment of the key risks of investments. In such businesses, investment professionals generally submit investment opportunities for review and approval by a review committee and/or investment committee, subject to delineated exceptions set forth in the funds' investment committee charters or resolutions. Review and investment committees are generally comprised of senior leaders and other senior professionals of the applicable investment business, and in many cases, other senior leaders of Blackstone and its businesses. Considerations that review and investment committees take into account when evaluating an investment may include, without limitation and depending on the nature of the investing business and its strategy, the quality of the business or asset in which the fund proposes to invest, the quality of the management team, likely exit strategies and factors that could reduce the value of the business or asset at exit, the ability of the business in which the investment is made to service debt in a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the businesses' operations. In addition, the majority of our businesses have ESG policies that address, among other things, the review of ESG risks in the respective business's investment process.
In addition, before deciding to invest in a new hedge fund or a new alternative
asset manager, as applicable, our
Existing investments are reviewed and monitored on a regular basis by investment and asset management professionals. In addition, our investment professionals, Portfolio Operations professionals and, where applicable, ESG teams, work with our portfolio company senior executives to identify opportunities to drive operational efficiencies and growth. As part of our value creation efforts for our investors, select businesses encourage certain of their respective portfolio companies and assets to consider a select number of priority ESG initiatives focused on diversity, decarbonization and good governance.
Structure and Operation of Our Investment Vehicles
Our private investment funds are generally organized as limited partnerships
with respect to
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structure in which limited partnerships organized by us accept commitments and/or subscriptions for investment from institutional investors and, to a more limited extent, high net worth individuals. Such commitments are generally drawn down from investors on an as-needed basis to fund investments (or for other permitted purposes) over a specified term. Our private equity and real estate funds are generally commitment-structured funds, with the exception of certain BPP, BREDS and BIP funds, as well as BREIT and BEPIF. For certain BPP, BREIT, BEPIF and BREDS funds, all or a portion of an investor's capital may be funded on or promptly after the investor's subscription date and cash proceeds resulting from the disposition of investments can be reinvested, subject to certain limitations and limited investor withdrawal rights. Our credit-focused funds are generally either commitment-structured funds or open-ended funds where the investor's capital is fully funded on or promptly after the investor's subscription date. The CLO vehicles we manage are structured investment vehicles that are generally private companies with limited liability. Most of our funds of hedge funds as well as our hedge funds are structured as funds where the investor's capital is fully funded on the subscription date. BIS is generally structured around separately managed accounts.
Our investment funds, separately managed accounts and other vehicles not
domiciled in the European Economic Area (the "EEA") are each generally advised
by a Blackstone entity serving as investment adviser that is registered under
the
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In addition to having an investment adviser, each investment fund that is a limited partnership, or "partnership" fund, also has a general partner that, apart from partnership funds domiciled in the EEA, generally makes all operational and investment decisions, including the making, monitoring and disposing of investments. The limited partners of the partnership funds generally take no part in the conduct or control of the business of the investment funds, have no right or authority to act for or bind the investment funds and have no influence over the voting or disposition of the securities or other assets held by the investment funds. With the exception of certain of our funds of hedge funds, hedge funds, certain credit-focused and real estate debt funds, and other funds or separately managed accounts for the benefit of one or more specified investors, third party investors in some of our funds have the right to remove the general partner of the fund or to accelerate the termination of the investment fund without cause by a majority or supermajority vote. In addition, the governing agreements of many of our investment funds provide that in the event certain "key persons" in our investment funds do not meet specified time commitments with regard to managing the fund, then (a) investors in such funds have the right to vote to terminate the investment period by a specified percentage (including, in certain cases a simple majority) vote in accordance with specified procedures, or accelerate the withdrawal of their capital on an investor-by-investor basis, or (b) the fund's investment period will automatically terminate and a specified percentage (including, in certain cases a simple majority) in accordance with specified procedures is required to restart it. In addition, the governing agreements of some of our investment funds provide that investors have the right to terminate the investment period for any reason by a supermajority vote of the investors in such fund.
Fee Structure/Incentive Arrangements
Management Fees
The following is a general description of the management fees earned by Blackstone.
• The investment adviser of each of our non-EEA domiciled carry funds and the
AIFM of each of our EEA domiciled carry funds generally receives an annual
management fee based on a percentage of the fund's capital commitments,
invested capital and/or undeployed capital during the investment period and
the fund's invested capital or investment fair value after the investment
period, except that the investment adviser or AIFM to certain of our
credit-focused, BPP and BCEP funds receives a management fee based on a
percentage of invested capital or net asset value. These management fees
are payable on a regular basis (typically quarterly) in the contractually
prescribed amounts over the life of the fund. Depending on the base on
which management fees are calculated, negative performance of one or more
investments in the fund may reduce the total management fee paid for the
relevant period, but not the fee rate. Management fees received are not
subject to clawback.
• The investment adviser of each of our funds that are structured like hedge
funds, or of our funds of hedge funds, registered mutual funds, UCITs funds
and separately managed accounts that invest in hedge funds, generally
receives a management fee based on a percentage of the fund's or account's
net asset value. These management fees are payable on a regular basis
(typically monthly or quarterly). These funds generally permit investors to
withdraw or redeem their interests periodically, in some cases following
the expiration of a specified period of time when capital may not be
withdrawn. Decreases in the net asset value of investor's capital accounts
may reduce the total management fee paid for the relevant period, but not
the fee rate. Management fees received are not subject to clawback. In
addition, to the extent the mandate of our funds is to invest capital in
third party managed funds, as is the case with our funds of hedge funds,
our funds will be required to pay management fees to such third party
managers, which typically are borne by investors in such investment
vehicles.
• The investment adviser of each of our CLOs typically receives annual
management fees, which are calculated as a percentage of the CLO's assets,
and additional incentive management fees subject to a return hurdle being
met. These management fees are payable on a regular basis (typically
quarterly). Although varying from deal to deal, a CLO will typically be
wound down within eight to eleven years of being launched. The amount of
fees will decrease as the CLO deleverages toward the end of its term.
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• The investment adviser of each of our separately managed accounts generally
receives annual management fees based on a percentage of each account's net
asset value or invested capital. The management fees we receive from each
of our separately managed accounts are generally paid on a regular basis
(typically quarterly). Such management fees are generally subject to
contractual rights the investor has to terminate our management on
generally as short as 30 days' notice.
• The investment adviser of each of our credit-focused registered and
non-registered investment companies and our BDCs typically receive an
annual management fee based on a percentage of net asset value or total
managed assets. The management fees we receive from the registered
investment companies we manage are generally paid on a regular basis
(typically quarterly). Such management fees are generally subject to
contractual rights of the company's board of directors to terminate our
management of an account on as short as 30 days' notice.
• The investment adviser of BXMT receives an annual management fee, paid
quarterly, based on a percentage of BXMT's net proceeds received from
equity offerings and accumulated "distributable earnings" (which is
generally equal to its net income, calculated under GAAP, excluding certain
non-cash and other items), subject to certain adjustments.
• The investment adviser of BREIT and AIFM of BEPIF receive a management fee
based on a percentage of BREIT's or BEPIF's, as applicable, net asset value
per annum, payable monthly.
For additional information regarding the management fee rates we receive, see "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Revenue Recognition - Management and Advisory Fees, Net."
Incentive Arrangements
Our incentive arrangements are composed of (a) contractual incentive fees received from certain investment vehicles upon achieving specified cumulative investment returns ("Incentive Fees"), and (b) a disproportionate allocation of the income generated by investment vehicles otherwise allocable to investors upon achieving certain investment returns ("Performance Allocations", and, together with Incentive Fees, "Performance Revenues").
In our carry funds, our Performance Revenues consist of the Performance Allocations to which the general partner or an affiliate thereof is entitled, commonly referred to as carried interest. Our ability to generate and realize carried interest is an important element of our business and has historically accounted for a very significant portion of our income.
Carried interest is typically structured as a net profits interest in the applicable fund. In the case of our carry funds, carried interest is generally calculated on a "realized gain" basis, and each general partner (or affiliate) is generally entitled to an allocation of up to 20% of the net realized income and gains (generally taking into account realized and unrealized or net unrealized losses) generated by such fund. Net realized income or loss is not generally netted between or among funds, and in some cases our carry funds provide for allocations to be made on current income distributions (subject to certain conditions).
For most carry funds, the carried interest is subject to a preferred limited partner return ranging from 5% to 8% per year, subject to a catch-up allocation to the general partner. Some of our carry funds do not provide for a preferred return, and generally the terms of our carry funds vary in certain respects across our business units and vintages. If, at the end of the life of a carry fund (or earlier with respect to certain of our real estate, real estate debt, core+ real estate, credit-focused, multi-asset class and opportunistic investment funds), as a result of diminished performance of later investments in a carry fund's life, (a) the general partner receives in excess of the relevant carried interest percentage(s) applicable to the fund as applied to the fund's cumulative net profits over
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the life of the fund, or (in certain cases) (b) the carry fund has not achieved investment returns that exceed the preferred return threshold (if applicable), then we will be obligated to repay an amount equal to the carried interest that was previously distributed to us that exceeds the amounts to which we were ultimately entitled, up to the amount of carried interest received on an after-tax basis. This is known as a "clawback" obligation and is an obligation of any person who received such carried interest, including us and other participants in our carried interest plans.
Although a portion of any dividends paid to our stockholder may include any
carried interest received by us, we do not intend to seek fulfillment of any
clawback obligation by seeking to have our stockholders return any portion of
such dividends attributable to carried interest associated with any clawback
obligation. To the extent we are required to fulfill a clawback obligation,
however, we may determine to decrease the amount of our dividends to our
stockholders. The clawback obligation operates with respect to a given carry
fund's own net investment performance only and carried interest of other funds
is not netted for determining this contingent obligation. Moreover, although a
clawback obligation is several, the governing agreements of most of our funds
provide that to the extent another recipient of carried interest (such as a
current or former employee) does not fund his or her respective share of the
clawback obligation then due, then we and our employees who participate in such
carried interest plans may have to fund additional amounts (generally an
additional 50% to 70% beyond our pro-rata share of such obligation) although we
retain the right to pursue any remedies that we have under such governing
agreements against those carried interest recipients who fail to fund their
obligations. We have recorded a contingent repayment obligation equal to the
amount that would be due on
In our structures other than carry funds, our Performance Revenues generally
consist of performance-based allocations of a vehicle's net capital appreciation
during a measurement period, typically a year, subject to the achievement of
minimum return levels, high water marks, and/or other hurdle provisions, in
accordance with the respective terms set out in each vehicle's governing
agreements. Such allocations are typically realized at the end of the
measurement period and, once realized, are typically not subject to clawback or
reversal. In particular, our ability to generate and realize these amounts is an
important element of our business. Such allocations in certain of our
The following is a general description of the Performance Revenues earned by Blackstone in structures other than carry funds:
• In our Hedge Fund Solutions segment, the investment adviser of our funds of
hedge funds, certain hedge funds, separately managed accounts that invest
in hedge funds and certain non-U.S. registered investment companies, is
entitled to an incentive fee of 0% to 20%, as applicable, of the applicable
investment vehicle's net appreciation, subject to "high water mark"
provisions and in some cases a preferred return. In addition, to the extent
the mandate of our funds is to invest capital in third party managed hedge
funds, as is the case with our funds of hedge funds, our funds will be
required to pay incentive fees to such third party managers, which
typically are borne by investors in such investment vehicles.
• The general partners or similar entities of each of our real estate and
credit hedge fund structures receive incentive fees of generally up to 20%
of the applicable fund's net capital appreciation per annum.
• The investment adviser of our BDCs receives (a) income incentive fees of
12.5% or 15%, as applicable, subject to, in certain cases, certain hurdles,
catch-ups and caps, payable quarterly, and (b) capital gains incentive fees
(net of realized and unrealized losses) of 12.5% or 15%, as applicable,
payable annually.
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• The investment manager of BXMT receives an incentive fee generally equal to
20% of BXMT's distributable earnings in excess of a 7% per annum return on
stockholders' equity (excluding stock appreciation or depreciation),
provided that BXMT's distributable earnings over the prior three years is
greater than zero.
• The special limited partner of each of BREIT and BEPIF receives a
performance participation allocation of 12.5% of total return, subject to a
5% hurdle amount with a catch-up and recouping any loss carry forward
amounts, payable quarterly.
• The general partners of certain open-ended BPP and BIP funds are entitled
to an incentive fee allocation generally between 7% and 12.5% of net
profit, subject to a hurdle amount generally of between 5.5% and 7%, a loss
recovery amount and a catch-up. Incentive allocations for these funds are
generally realized every three years from when a limited partner makes its
initial investment.
Advisory and Transaction Fees
Some of our investment advisers or their affiliates receive customary fees (for example, acquisition, origination and other transaction fees) upon consummation of their funds' transactions, and may from time to time receive advisory, monitoring and other fees in connection with their activities. For most of the funds where we receive such fees, we are required to reduce the management fees charged to the funds' investors by 50% to 100% of such limited partner's share of such fees.
Capital Invested In and Alongside Our Investment Funds
To further align our interests with those of investors in our investment funds, we have invested the firm's capital and that of our personnel in the investment funds we sponsor and manage. Minimum general partner capital commitments to our investment funds are determined separately with respect to each of our investment funds and, generally, are less than 5% of the limited partner commitments of any particular fund. See "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for more information regarding our minimum general partner capital commitments to our funds. We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs. In many cases, we require our senior managing directors and other professionals to fund a portion of the general partner capital commitments to our funds. In other cases, we may from time to time offer to our senior managing directors and employees a part of the funded or unfunded general partner commitments to our investment funds. Our general partner capital commitments are funded with cash and not with carried interest or deferral of management fees.
Investors in many of our funds also receive the opportunity to make additional "co-investments" with the investment funds. Our personnel, as well as Blackstone itself and certain Blackstone relationships, also have the opportunity to make investments, in or alongside our funds and other vehicles we manage, in some instances without being subject to management fees, carried interest or incentive fees. In certain cases, limited partner investors may pay additional management fees or carried interest in connection with such co-investments.
Competition
The asset management industry is intensely competitive, and we expect it to remain so. We compete both globally and on a regional, industry and sector basis. We compete on the basis of a number of factors, including investment performance, transaction execution skills, access to capital, access to and retention of qualified personnel, reputation, range of products and services, innovation and price.
We face competition both in the pursuit of institutional and individual investors for our investment funds and in acquiring investments in attractive portfolio companies and making other investments. Although many
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institutional and individual investors have increased the amount of capital they commit to alternative investment funds, such increases may create increased competition with respect to fees charged by our funds. Certain institutional investors have demonstrated a preference to in-source their own investment professionals and to make direct investments in alternative assets without the assistance of private equity advisers like us. We compete for investments with such institutional investors and such institutional investors could cease to be our clients. With respect to the private wealth channel and insurance sector, the market for capital is highly competitive and requires significant investment.
Depending on the investment, we face competition primarily from sponsors managing other funds, investment vehicles and other pools of capital, other financial institutions and institutional investors (including sovereign wealth and pension funds), corporate buyers, special purpose acquisition companies and other parties. Several of these competitors have significant amounts of capital and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources or other resources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment or be perceived by sellers as otherwise being more desirable bidders, which may provide them with a competitive advantage in bidding for an investment.
In all of our businesses, competition is also intense for the attraction and retention of qualified employees. Our ability to continue to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees.
For additional information concerning the competitive risks that we face, see "- Item 1A. Risk Factors - Risks Related to Our Business - The asset management business is intensely competitive."
Environmental, Social and Governance
We aim to develop resilient companies and competitive assets that deliver
long-term value for our investors. ESG principles have long informed the way we
run our firm, approach investing and partner with the assets in our portfolio.
In recent years we have formalized our approach by building a dedicated
corporate ESG team that looks to develop ESG policies and support integration
within the business units, and regularly reports progress to stakeholders. ESG
at Blackstone is overseen by senior management. Senior management reports
quarterly on ESG to our board of directors, which is responsible for reviewing
our ESG strategy. We also engage with several organizations to help inform our
approach, including the
We believe that for certain investment strategies, consideration of appropriate ESG factors can help us identify attractive investment opportunities and assess potential risks in furtherance of our mission to deliver strong returns. Accordingly, we are seeking to develop a tailored approach to consideration of ESG factors in the investment lifecycle that takes into account, among other factors, the asset class and structure of the investment.
We are focused on corporate sustainability and pursuing environmental performance improvements at our office locations. We proactively renovate our spaces to provide additional employee amenities and comfort while implementing efficient lighting and HVAC systems. Blackstone also has an Emissions Reduction Program, which aims to decrease energy spend by reducing Scope 1 and Scope 2 carbon emissions by 15% on average across certain new investments where we control energy usage within the first three full calendar years of ownership. We continue to expand our resources to enable us to drive long-term value through sustainability practices, energy efficiency and decarbonization at scale.
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Blackstone's employees are integral to our culture of integrity,
professionalism, excellence and cooperation. The intellectual capital
collectively possessed by our employees is our most important asset. We hire
qualified people, train them and encourage them to work together to provide
their best thinking to the firm for the benefit of the investors in the funds we
manage. As of
Our board of directors plays an active role in overseeing our human capital management efforts. To that end, senior management reviews with our board of directors management succession planning and development and other key aspects of our talent management strategy.
Employee and Community Engagement
Blackstone is committed to ensuring our employees are engaged with their work and with their local communities. To that end, Blackstone regularly gathers feedback from our employees via internal and/or external surveys to assess employee engagement and satisfaction and develop targeted solutions. Blackstone also supports its employee affinity networks which are dedicated to recruiting, retaining and raising awareness of diverse groups through speaker series, networking events, service opportunities and mentoring relationships.
In addition, the
Talent Acquisition, Development and Retention
We believe the talent of our employees, coupled with our rigorous investment process, has supported our excellent investment record over many years. We are therefore focused on hiring, training, motivating and retaining talented individuals. Across all our businesses, we face intense competition for qualified personnel.
We seek to attract candidates from diverse backgrounds and skill sets and to hire the brightest minds in our industry. We believe our reputation, talent development opportunities and compensation make us an attractive employer. We encourage independent thinking and reward initiative while providing training and development opportunities to help our employees grow professionally. In addition, our Respect at Work programs and trainings help maintain an inclusive work environment in which all individuals are treated with respect and dignity. Employee education and training are also critical to maintaining a culture of compliance.
Blackstone offers a wide range of learning and professional development opportunities, both formally and informally, to help employees advance their careers and maximize the value they can add to the global firm. Incoming analyst classes are provided with training that spans their first few years. In addition, our new hires are provided with training and other opportunities to help them thrive in our culture, including through our Culture Program and our Leadership Speaker Series. Blackstone employees are trained or enrolled in compliance training when they start at the firm and we retrain employees globally at least once annually. Over the course of their careers at Blackstone, employees are offered learning opportunities in a number of areas including leadership and management development and communication skills, among others. We offer a global development curriculum on key capabilities required to succeed at Blackstone, and we partner with external organizations to deliver training programs for our employees. We consistently seek to create visibility and opportunities for talent to take on roles
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beyond their current positions, and for managers to connect regularly to discuss and match talent with critical roles. These efforts result in cross-pollination of talent that we believe engages our people and generates stronger outcomes for the firm.
As discussed below, we seek to retain and incentivize the performance of our employees through our compensation structure. We also enter into non-competition and non-solicitation agreements with certain employees. See "Part III. Item 11. Executive Compensation - Non-Competition and Non-Solicitation Agreements" for a description of the material terms of such agreements.
Diversity, Equity and Inclusion ("DEI")
We believe a diverse and inclusive workforce makes us better investors and a better firm. We are committed to attracting, developing and advancing a diverse workforce that represents a spectrum of backgrounds, identities and experiences. We are focused on embedding DEI principles to maintain a culture of equity and inclusion. We believe this will leverage the diversity of our workforce and deliver results for our investors.
To that end, our talent acquisition platform includes programs aimed at expanding diversity at Blackstone and in financial services, such as the Blackstone Future Women Leaders program and the Blackstone Diverse Leaders program. Our employees are invited to participate in our internal affinity networks, which seek to engage, connect and create a supportive environment for our employees, including by hosting speaker series, professional development panels and social events. These networks include our Blackstone Women's Initiative, Working Families Network, OUT Blackstone, Blackstone Veterans Network and Diverse Professionals Network, which was recently expanded to include a community of networks for Black, Hispanic and Latino, Asian and South Asian and Middle Eastern employees and allies. We have also achieved a score of 100% on the Human Rights Campaign Corporate Equality Index, earning the designation as a "Best Place to Work for LGBT+ Equality" for the fourth year in a row in 2022.
We believe diversity of thought and experience builds better businesses. We seek
to ensure that our board of directors is composed of members whose collective
experience, qualifications and skills will allow the board to effectively
satisfy its oversight responsibilities. We also recognize that diversity is an
important component of effective governance. Over one-third of our board of
directors is diverse, based on gender, race and sexual orientation, when known.
Likewise, with respect to our portfolio companies, in 2021 we announced that we
will target at least one-third diverse representation on new controlled
portfolio company boards in the
Compensation and Benefits
Our compensation is designed to motivate and retain employees and align their interests with those of the investors in our funds. In particular, incentive compensation for our senior managing directors and employees involves a combination of annual cash bonus payments and performance interests or deferred equity awards, which we believe encourages them to focus on the performance of our investment funds and the overall performance of the firm. The proportion of compensation that is "at risk" generally increases as an employee's level of responsibility rises. Employees at higher total compensation levels are generally targeted to receive a greater percentage of their total compensation payable in annual cash bonuses, participation in performance interests, and deferred equity awards and a lesser percentage in the form of base salary compared to employees at lower total compensation levels. To further align their interests with those of investors in our funds, our employees have the opportunity to make investments in or alongside our funds and other vehicles we manage. We also provide our employees robust health and retirement offerings, as well as a variety of quality of life benefits, including time-off options and well-being and family planning resources.
We believe our current compensation and benefit allocations for senior professionals are best in class and are consistent with companies in the alternative asset management industry. Our senior management periodically
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reviews the effectiveness and competitiveness of our compensation program. Most of our current senior managing directors and other senior personnel have equity interests in our business that entitle such personnel to cash distributions. See "Part III. Item 11. Executive Compensation - Compensation Discussion and Analysis - Overview of Compensation Philosophy and Program" for more information on compensation of our senior managing directors and certain other employees.
Blackstone also offers comprehensive and competitive benefits to its full-time
employees, including primary and secondary caregiver leave, adoption leave,
phased back to work, fertility coverage, back up childcare and more. We
continually evaluate and enhance our offerings to meet the needs of our
employees. For example, we offer additional family planning benefits for
Health and Wellness
We care greatly about the health, safety and wellbeing of our employees. We
offer employee well-being programs, including an online therapy program and
access to an education platform with coaching to support working parents and
caretakers caring for children who have behavioral problems, autism or
developmental disabilities. We also provide access to programs to further assist
our employees in managing their lives outside of work, such as group legal
services to help with estate planning and surrogacy agreements. In addition,
during the COVID-19 pandemic we invested over
Data Privacy and Security
Blackstone is committed to privacy and data protection. These topics are included in routine training received at least once annually by employees. Data privacy is typically addressed in the Global Head of Compliance's annual update to our board of directors. Blackstone's approach to data protection is set out in our Online Privacy Notice and its Investor Data Privacy Notice. Our Data Policy and Strategy Officer oversees privacy, data protection and information risk management efforts, leading the privacy and data protection function, which conducts privacy impact assessments, implements privacy-by-design initiatives and reconciles global privacy programs with local privacy requirements. Our privacy function also supports the Data Protection Operating Committee, Blackstone's global privacy compliance steering committee.
Blackstone has built a dedicated cybersecurity team and maintains a
comprehensive cybersecurity program to protect our systems, our operations and
the data entrusted to us by our investors, employees, portfolio companies and
business partners. Blackstone's cybersecurity program is led by our Chief
Information Security Officer, who works closely with our senior management to
develop and advance the firm's cybersecurity strategy and regularly reports to
our board of directors and the audit committee of our board of directors on
cybersecurity matters. We believe that cybersecurity is a team effort - every
employee has a responsibility to help protect the firm and secure its data. We
conduct regular testing at least once a year to identify vulnerabilities before
they can be exploited by attackers, using automated tools and "white hat"
hackers. We examine and validate our program every two to three years with third
parties, measuring it against industry standards and established frameworks,
such as the
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Regulatory and Compliance Matters
Our businesses, as well as the financial services industry generally, are
subject to extensive regulation in
Many of our businesses are subject to compliance with laws and regulations of
All of the investment advisers of our investment funds operating in the
Broker-dealers are subject to regulations that cover all aspects of the securities business, including, among others, the implementation of a supervisory control system over the securities business, advertising and sales practices, conduct of and compensation in connection with public securities offerings, maintenance of adequate net capital, record keeping and the conduct and qualifications of employees. In particular, as a registered broker-dealer and member ofFINRA , BSP is subject to theSEC's uniform net capital rule, Rule 15c3-1. Rule 15c3-1 specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer's assets be kept in relatively liquid form. TheSEC and various self-regulatory organizations impose rules that require notification when net capital of a broker-dealer falls below certain predefined criteria, limit the ratio of subordinated debt to equity in the capital structure of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, theSEC's uniform net capital rule imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to theSEC for certain withdrawals of capital.
In addition, certain of the closed-end and open-end investment companies we manage, advise or sub-advise are registered, or regulated as a BDC, under the 1940 Act. The 1940 Act and the rules thereunder govern, among other things, the relationship between us and such investment vehicles and limit such investment vehicles' ability to enter into certain transactions with us or our affiliates, including other funds managed, advised or sub-advised by us.
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Pursuant to the
Blackstone Europe Fund Management S.à r.l. ("BEFM") is an authorized Alternative
Investment Fund Manager under the Luxembourg Law of 12 July 2013 on alternative
investment fund managers (as amended, the "AIFM Law"), which largely implements
AIFMD in Luxembourg. BEFM may also provide discretionary portfolio management
services, investment advice and reception and transmission of orders in
accordance with article 5(4) of the AIFM Law. BEFM provides investment
management functions including portfolio management, risk management,
administration, marketing and related activities to the assets of its
alternative investment funds, in accordance with the AIFM Law and the regulatory
provisions imposed by the
Commission de Surveillance du Secteur Financier
in Luxembourg. As of January 1, 2021 , BEFM promotes Blackstone products and
services in European countries where BGIP is not otherwise licensed to do so.
BEFM has branches in Paris , Milan and Frankfurt which provides marketing
services and where distribution and deal sourcing individuals are based.
Certain Blackstone operating entities are licensed and subject to regulation by
financial regulatory authorities in
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Rigorous legal and compliance analysis of our businesses and investments is endemic to our culture and risk management. Our Chief Legal Officer and Global Head of Compliance, together with the Chief Compliance Officers of each of our businesses, supervise our compliance personnel, who are responsible for addressing the regulatory and compliance matters that affect our activities. We strive to maintain a culture of compliance through the use of policies and procedures including a code of ethics, electronic compliance systems, testing and monitoring, communication of compliance guidance and employee education and training. Our compliance policies and procedures address regulatory and compliance matters such as the handling of material non-public information, personal securities trading, marketing practices, gifts and entertainment, anti-money laundering, anti-bribery and sanctions, valuation of investments on a fund-specific basis, recordkeeping, potential conflicts of interest, the allocation of investment and co-investment opportunities, collection of fees and expense allocation.
Our compliance group also monitors the information barriers that we maintain between Blackstone's businesses. We believe that our various businesses' access to the intellectual knowledge and contacts and relationships that reside throughout our firm benefits all of our businesses. To maximize that access and related synergies without compromising compliance with our legal and contractual obligations, our compliance group oversees and monitors the communications between groups that are on the private side of our information barrier and groups that are on the public side, as well as between different public side groups. Our compliance group also monitors contractual obligations that may be impacted and potential conflicts that may arise in connection with these inter-group discussions.
In addition, disclosure controls and procedures and internal controls over
financial reporting are documented, tested and assessed for design and operating
effectiveness in accordance with the
Our enterprise risk management framework is designed to manage non-investment risk areas across the firm, such as strategic, financial, human capital, legal, operational, regulatory, reputational and technology risks. Our enterprise risk committee assists Blackstone management to identify, assess, monitor and mitigate such key enterprise risks at the corporate, business unit and fund level. The enterprise risk committee is chaired by our Chief Financial Officer and is comprised of senior management across business units, corporate functions and regions. Senior management reports to the audit committee of the board of directors on the agenda of risk topics evaluated by the enterprise risk committee and provides periodic risk reports, a summary of its view on key risks to the firm and detailed assessments of selected risks, as applicable. Our firmwide valuation committee reviews the valuation process for investments held by us and our investment vehicles, including the application of appropriate valuation standards on a consistent basis. The firmwide valuation committee is chaired by our Chief Financial Officer and is comprised of senior heads of Blackstone's businesses and representatives from legal and finance. The review committees and/or investment committees of our businesses review and evaluate investment opportunities in a framework that includes a qualitative and quantitative assessment of the key risks of investments. See "- Investment Process and Risk Management."
There are a number of pending or recently enacted legislative and regulatory
initiatives that could significantly affect our business. Please see "- Item 1A.
Risk Factors - Risks Related to Our Business - Financial regulatory changes in
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Available Information
Effective
We file annual, quarterly and current reports and other information with the
Our principal internet address is www.blackstone.com. We make available free of
charge on or through www.blackstone.com our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on
Form 8-K,
and amendments to those reports, as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the
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