KKR founders made more than $160 million each in 2013

[February 25, 2014]  By Greg Roumeliotis

(Reuters) — Founders Henry Kravis and George Roberts of KKR & Co LP's <KKR.N> received $161.4 million and $165.5 million respectively in cash dividends and executive pay in 2013, over 17 percent more than they got in 2012, a regulatory filing showed on Monday.

The disclosure was made in KKR's annual report filed with the U.S. Securities and Exchange Commission and demonstrates how the private equity firm's sale of assets in 2013 enriched not just its investors but also its leaders and dealmakers.

This is because buoyant capital markets made it easier for KKR to cash out on its fund investments at higher valuations, generating performance fees that go to KKR partners but also to shareholders in the form of dividends.

But the rise in the founders' profits in 2013 compared to 2012 was not down to higher distributable earnings, which were almost flat year-on-year because the firm also had a strong year of asset sales in 2012.

Instead, the rise was due to KKR changing its payout policy last year and offering to share 40 percent of profits from its own investments with shareholders.

This brought KKR's total 2013 dividends to $1.40 per share, up 15 percent from 2012 and in line with the rise in the founders' profits.

Previously, about 35-37 percent of KKR's annual balance sheet gains had been paid out to shareholders in one installment in the fourth quarter. This was to cover their tax liabilities on those dividends.

"BARBARIANS AT THE GATE"

Kravis and Roberts, both aged 70, are the firm's top shareholders and together own close to a quarter of the firm.

According to the filing, Kravis and Roberts, who are co-executive officers and co-chairmen of the firm, received $117.2 million and $121.4 million respectively in cash from dividend payments.

Kravis and Roberts also received $44.2 million and $44.1 million respectively in executive compensation, mostly in cash payments from carried interest, KKR's cut of the investment profits that goes directly to its partners.

Kravis and Roberts had an estimated net worth of $4.7 billion and $4.4 billion as of September 2013, according to Forbes.

KKR was founded in 1976 by Kravis, Roberts and Jerome Kohlberg. It gained widespread recognition through its $25 billion leveraged buyout of RJR Nabisco in 1988, a battle that was immortalized in the bestseller, "Barbarians at the Gate".

(Reporting by Greg Roumeliotis in Berlin; editing by Sophie Hares)

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