$14 trillion BlackRock ties government compensation to non-public markets and ‘alts’ push

The move could see execs eventually earn millions in payouts for BlackRock’s top-paid private markets executives if funds perform exceptionally well over the next decade. (No figures have been disclosed yet and BlackRock won’t say what its profit-sharing carry program is worth.) With the pay plan, BlackRock aims to lock down talent at the world’s largest asset manager as it wages a fierce war with other firms for top private markets players. The bid to keep people in their seats is particularly acute, as the gargantuan company continues its massive strategic push into the alternative asset management gold rush.  

The new pay offering, called the executive carry program, was adopted on Jan. 13, and is the latest indicator of the seriousness of BlackRock’s bet on alternatives, which now account for $660 billion of the $14 trillion in assets under management (AUM) at the firm. 

Coming from a fund manager that built its business in large part on low-cost ETFs and index funds under the iShares brand, the move underscores its new head-to-head rivalry with Apollo, Blackstone, and KKR, in addition to other traditional asset managers, in competing for wealthier clients and more profitable asset classes in the private markets. The firms are vying not just for investors and funds, but for the best private markets athletes to manage and oversee investments.  

“There has been a flow of talent from the public company investment sector to the private company sector,” said R.J. Bannister, partner and chief operating officer at compensation consulting firm Farient Advisors. “One of the reasons for individuals to go is because of the more lucrative pay amounts from carried interest programs.”

In addition to helping with retention, carried interest has a big tax advantage for its recipients. It’s typically taxed at around 20% because it’s treated as a partnership interest in the investment entity, versus regular compensation, which is usually taxed at up to 37%, noted Eric Hosken, a partner at Compensation Advisory Partners in New York. 

“That’s what makes it a very attractive vehicle to the employee,” said Hosken. “They are actually getting treated as an owner in the entity.” 

Massive acquisitions in the alt space

The timing of the executive carry program comes hard on the heels of massive acquisitions by BlackRock and a major strategic shift further into alts industry-wide. KKR estimates the alternatives industry will grow to more than $24 trillion in assets in 2028, up from $15 trillion in 2022. Bank of New York has proclaimed an “alternatives renaissance,” and is expecting alts AUM for private wealth investors to triple from $4 trillion to $12 trillion. 

BlackRock’s purchases of Global Infrastructure Partners (GIP) in 2024 and private credit investment manager HPS Investment Partners in 2025, for more than $15 billion in cash and stock combined, catapulted it into the top five global alternatives providers. To round out its alts offerings, BlackRock closed a deal to buy private markets data provider Preqin in 2025 for another $3.2 billion. 

Post-acquisitions, BlackRock told investors it hopes revenue from private markets and technology will make up more than a fifth of its revenue in the coming years, and CEO and Chairman Larry Fink told investors this month the firm is working toward a private markets fundraising goal of $400 billion by 2030.

“2026 will be our first full year as a unified platform with GIP, HPS and Prequin,” Fink said in a statement on January 15. “Around the world, clients are looking to do more across BlackRock.”

The company reported $24.2 billion in revenue in its most recent fiscal year. Its leadership team believes “this evolution of BlackRock’s business will translate to higher and more durable organic growth, greater resilience through market cycles and multiple expansion for shareholders,” BlackRock told investors in its 2025 proxy statement.

In the same proxy report, the board’s compensation committee acknowledged that the firm is now competing directly with pure-play private equity companies, and it added Apollo Global Management, Blackstone, and KKR & Co. to the peer group it reviews when it benchmarks BlackRock’s executive compensation plans. Previously, the peer group included nine other asset managers including Goldman Sachs, State Street, and T. Rowe Price. 

However, the compensation gap can be stark—and BlackRock is committing to competing in more rarified air. According to Heidrick & Struggles data, top-paid executives at the largest private equity firms can receive maximum carry allocations with an expected value of $150 million to $225 million across all their fund participation over a fund’s lifetime, assuming successful returns. In contrast, annual compensation for investment bank CEOs is valued at roughly $30 million to $40 million annually. 

Steven Kaplan, professor of finance and entrepreneurship at the University of Chicago Booth School of Business, noted that some large asset management firms have lost a lot of talent to private equity. 

“The churn from asset management to private equity can be brutal,” said Kaplan, who is also co-creator of the Kaplan-Schoar private equity returns benchmarking approach. “What’s worse is if you don’t pay your really good people, then they leave. That’s the worst thing.”

A survey of 80 heads of teams at alts and traditional asset management firms conducted by asset management consulting firm Magellan Advisory Partners for its 2026 outlook report found that 29% of respondents are expecting to lose key staff chiefly due to increased poaching from competitors, firm restructurings, and less money in the bonus pool. Meanwhile, more than half of respondents, 54%, reported that they’re looking to hire and onboard more executives this year. 

Building a moat around talent

At BlackRock, the firm’s new executive carry program comes with a caveat that effectively builds a talent moat around its senior alts team: If you leave to join a competitor, start a rival fund, or engage in what BlackRock deems “competitive activity,” your stake in the new carry program ticks down to zero. BlackRock defines competitive activity as anything “that competes with the business operations of BlackRock, the general partner, or any of their respective subsidiaries, affiliates, and successors, as determined by the general partner in its sole discretion.”

According to the disclosed provisions, both vested and unvested portions of carry distributions will be forfeited if an executive is found by BlackRock to have engaged directly or indirectly in competitive activity. Bannister of Farient said these types of total forfeiture provisions are designed to be especially punitive if an executive leaves for a competitor. 

“It’s meant to provide handcuffs and provide the company with holding power,” said Bannister. “If [employees] leave, they leave a significant amount of value on the table.” Executives tend not to like total forfeiture provisions, he said, but they often accept them because the potential upside and previous track record means it’s worth their time and commitment.

Generally, the provisions serve a dual purpose, said Aalap Shah, managing director of compensation firm Pearl Meyer. 

“The main thing a firm would want to do is keep the team together that they’ve assembled,” he said. The provisions can also serve as “a deterrent” to competitors. “Basically, it’s going to be expensive to steal a team member because they’re going to ask you for a lot of money” to make up for the carry they’re walking away from. 

BlackRock isn’t alone in requiring unvested and vested carry to be wiped out if an executive engages in competitive activity, which is known in the industry as being a “bad leaver.” But forfeiting vested carry as well as unvested is less common, comp experts agreed.

On the other hand, the approach buys time. A flourish in BlackRock’s carry program that distinguishes it from some staid market practices is that the vesting schedule is backloaded, meaning executives don’t vest at all until the year three of a five-year vesting schedule. Steffen Pauls, a former managing director at KKR, called the backloaded vesting schedule “unusual but investor-friendly” to BlackRock’s customers. Similarly, Shah said a five-year vesting timeframe is fairly typical generally, but he often sees 20% annual vesting. 

“It really makes sure that the team stays around until that first distribution kicks in,” noted Pauls, founder of Moonfare, a digital platform that gives investors access to private equity and venture capital funds.

A BlackRock spokesman referred questions about its carry program to its public disclosures and declined to comment further.  

According to a securities filing disclosing the program’s broad strokes, the unnamed executives chosen to participate in the program will each get a percentage of the eventual profits BlackRock hopes to collect from its investments, although the payouts are subject to holdbacks and other restrictions. They come in the form of carried interest distributions via a pool of the asset manager’s flagship private markets funds. The flagship funds generally raise more than $1 billion in committed investment capital apiece, and are expected to include each of BlackRock’s private asset classes, including infrastructure, private debt, private equity, and real estate. 

The executive carry program follows the adoption of a similarly structured program last February for Fink, BlackRock’s CEO and chairman. Fink’s deal entitles him to an undisclosed percentage of carry incentive distributions from a composite bucket of 10 of BlackRock’s flagship private markets funds that raised capital in 2024.

In a typical carry program, investors must first get a minimum return, usually 7% to 8% annually, known as the hurdle rate, said Pauls. Only after investors get back their capital plus the minimum return does the carry kick in. Typically, firms keep 20% of the remaining profits, and BlackRock’s program is designed to share a swig of that profit with senior executives, based on their individual contributions to the specific funds. The program serves a retention purpose by paying the alts team at BlackRock in line with industry standards, he added. Still, carry likely represents a smaller share of total comp for BlackRock executives than it does for pure-play private equity executives, where it can comprise the lion’s share of long-term pay as well as the total pay mix. 

Keeping up with Goldman Sachs

The program—and the forfeiture provision— mirror a similar strategic shift and pay structure revamp at Goldman Sachs Group, which last year approved a carried interest program for CEO David Solomon and a select group of senior executives. Goldman’s carried interest pool includes seven alts funds the firm launched in 2024 including buyout and private equity. As part of the program, Goldman reduced cash compensation to executives who are eligible. 

Like BlackRock, Goldman said its move will align senior leaders’ annual compensation with its alts strategic initiative and its clients, and help it onboard and retain top talent. Similarly, Goldman’s carried interest program says carry points will be subject to forfeiture and clawback provisions whether vested or not if an executive jumps to a competitor, a consistent point across its compensation programs. 

Goldman requires carry participants to put their own money into each alt fund in the carry program in the form of a minimum limited partner commitment of $1 million a head for Solomon, chief operating officer John Waldron, and chief financial officer Denis Coleman. Other participants have to make a minimum $50,000 investment. 

The shifting tectonic plates at both firms reflects a broader transformation in asset management. When you combine private equity, venture capital, infrastructure, private credit, and real estate, the asset classes represent a substantial portion of the overall investment market, said Kaplan. He calls it the “market portfolio,” or the full universe of assets to invest in. “If an investor wants to hold a market portfolio, which is what indexers like BlackRock, Vanguard, and State Street want to do, firms have to offer alternatives,” Kaplan said. 

“There’s money to be made, so that’s the No. 1 driver,” he continued. “But also, there’s got to be demand for it, and the demand is that there’s a substantial amount of assets in this market. If you want to provide the market portfolio to your investors, you have to play in that space.”