KKR co-founders Henry Kravis and George Roberts.
KO SASAKI For Forbes
The coronavirus pandemic has hit Wall Street hard as banks, hedge funds and private equity firms navigate an unprecedented business stoppage. As the biggest firms on the Street work to pump money into the economy, and manage their mammoth portfolios of assets through the tumult, they’re also putting big money towards relief efforts.
KKR & Co, co-founded by billionaires Henry Kravis and George Roberts, has created a $50 million fund dedicated to supporting frontline workers and mitigating the financial hardship created by the pandemic. The fund will be used to help first responders and health workers, and in various financial relief efforts aimed workers and small businesses in the communities where it invests. In a letter obtained by Forbes, KKR’s co-founders Kravis and Roberts, and the firm’s co-presidents Joseph Bae and Scott Nuttall, also told investors they will forego any end of year bonuses and their remaining salary in 2020.
Other private equity firms have also begun setting relief funds and other assistance.
Earlier this week, Blackstone Group committed $10 million to the New York State COVID-19 First Responders Fund, and $5 million to organizations like City Harvest, World Central Kitchen and Coalition for the Homeless, who are either orchestrating food delivery to healthcare workers and first responders, or supporting vulnerable populations in New York City. Boston-based Advent International announced a $25 million Relief Fund. A long list of its portfolio companies in healthcare and materials are also individually working to solve challenges presented by the pandemic. Meanwhile, software private equity powerhouses Vista Equity Partners and Thoma Bravo have let some of their portfolio companies offer free services to critical players in the COVID-19 response, in addition to other philanthropy.
In addition to the money set aside for relief, KKR said its top leadership will forego salary and bonus compensation.
While Kravis, Roberts, Bae and Nuttall each earn $300,000 a year in salary, their incentive pay in the form of bonuses, stock awards and carried interests can be enormous. Last year, the four earned a combined $150 million, according to securities filings.
“The capital for the KKR Relief Fund will be funded by significant contributions by executives across the firm, in addition to direct support from KKR,” Kravis, Roberts, Bae and Nuttall said. “As part of this important initiative, we feel it is appropriate that the four of us forego and further salary, as well as annual bonuses in 2020.”
It’s unclear whether the foregone bonuses will include carried interest. In 2019, Kravis and Roberts gave their bonuses to KKR’s more rank-and-file employees, while Bae and Nuttall earned $8.3 million bonuses each.
Amid the coronavirus turmoil, some of KKR’s portfolio companies are also cutting back sharply. Bloomberg News reported last week, KKR-backed Envision Healthcare was delaying some 2019 incentive payments to its doctors and physicians in a move aimed at conserving cash amid the sudden stoppage of most elective healthcare.
“Over the past 44 years, KKR has navigated many financial crises, local disasters, and global challenges. The COVID-19 pandemic, however, is different in both the scale and depth of its impact across the global economy, local communities, and our personal lives,” said KKR’s leadership in their letter. “It is wreaking havoc on every country, every industry, every household, and virtually every single person.”