8-K/ALeadership Changes

KKR & Co. Inc. 8-K/A Report, Executive Changes (Nov 3, 2017)

Filed November 3, 2017For Securities:KKRKKRTKKR-PDKKRS

Summary

This amended 8-K filing from KKR & Co. Inc. (KKR) provides crucial details regarding the compensation awarded to newly appointed Co-Presidents and Co-Chief Operating Officers, Joseph Bae and Scott Nuttall. The amendments clarify the compensation structure following their appointments and addition to the Board of Directors of the Managing Partner on July 19, 2017. The new compensation arrangements are designed to incentivize long-term performance and retention. Investors should note the significant grant of restricted equity units and KKR Holdings units to Messrs. Bae and Nuttall. A substantial portion of these grants is tied to vesting conditions, including time-based tranches and a significant market price hurdle of $40.00 per common unit. This structure aligns executive compensation with KKR's stock performance and long-term value creation for shareholders.

Key Highlights

  • 1KKR has amended its prior 8-K filing to disclose new compensation arrangements for Joseph Bae and Scott Nuttall.
  • 2Messrs. Bae and Nuttall have been granted 4 million restricted equity units each, subject to time-based and market price-based vesting conditions.
  • 3A key market price vesting condition requires KKR's common unit price to reach and maintain $40.00 for 10 consecutive trading days by December 31, 2022.
  • 4Additionally, each executive has been allocated 4,850,000 KKR Holdings units, with time-based vesting over five years (2018-2022).
  • 5The KKR Holdings units are exchangeable for KKR common units on a one-for-one basis.
  • 6The awarded KKR Holdings units are from previously unallocated units, meaning they will not increase the total number of outstanding units on a fully-diluted basis upon vesting.
  • 7Vesting for both types of awards is contingent on continued service, with provisions for death and disability.

Frequently Asked Questions

The primary purpose of this amendment is to provide details about the compensation awarded to Joseph Bae and Scott Nuttall, who were appointed Co-Presidents and Co-Chief Operating Officers on July 19, 2017. This filing clarifies the specific equity grants and vesting conditions associated with their new roles.

Each executive received 4 million restricted equity units and 4,850,000 KKR Holdings units. The restricted equity units have both time-based vesting over five years and a market price-based vesting condition tied to KKR's common unit price reaching $40.00. The KKR Holdings units also have time-based vesting over five years.

The market price condition requires the market price of KKR common units to reach and be maintained at $40.00 per unit for 10 consecutive trading days on or before December 31, 2022, for the remaining 2.5 million restricted equity units granted to each executive to vest.

No, the KKR Holdings units allocated to Messrs. Bae and Nuttall are from previously unallocated units. Therefore, their allocation and subsequent vesting will not increase the total number of KKR Holdings units outstanding or KKR common units outstanding on a fully-diluted basis, nor will they dilute KKR's ownership interests in its underlying operating partnerships.