I instead would look at it across our total comp margin. And what we’ve guided historically is on a total comp margin, we can operate in the low-40% range. In 2022, we were at 39.7%, I believe, 2019, 2020 and 2021. We were below that 40% guidance number. And if monetization comes down and carried interest comes down, that’s our highest comp margin at 65%. And so all things equal, you would expect compensation margin across the board to come down. So there was a lot in your question, but hopefully I got at most of it and happy to catch up more offline on the topic.
Scott Nuttall: Yes, Alex, the only thing I would add is our people understand that monetizations, if they come down, compensation is going to come down as a result. Our business, you get paid on cash outcomes. So I don’t think that would be a surprise to anybody.
Operator: Our next question comes from Glenn Schorr with Evercore. Please proceed with your question.
Glenn Schorr: Hi. Thanks very much. So I’m a big believer in the big picture growth picture that you laid out. So cool with that. One of the five things you talked about getting right is performance, and I think your long-term performance is awesome. I want to focus on 2022 for a second, get the right perspective, PE down 14%. I think just the fourth quarter real estate was down 8%, leveraged credit down 3%. I want to €“ I know it’s a longer tail. I know your long-term track record is great. I wonder if we could talk about the right perspective on portfolio composition or how you do marks relative to Publix €“ that was only the only Achilles heel that caught my eye in the quarter. Thanks.
Rob Lewin: Yes. Hey, Glenn, Glenn, it’s Rob. Thanks for question. Why don’t I just start with valuation methodology because I think that that’s really important for this discussion? Then Craig and Scott could spend some time as it relates to performance. We’ve been reporting as a public entity now for close to 17 years if you include KPE, which was the predecessor closed-end fund the KKR merged into. And we really do believe that over that period of time, we’ve developed best-in-class process for determining fair value for our Level 3 assets, which are those assets that don’t have observable marks. Our exact process and methodology is, of course, by its nature, different by asset class, but what is most important to us is that we have a consistent process and methodology quarter after quarter after quarter.
And we believe that aspect is critical in delivering a fair and representative view on fair value, which we think you’ve seen over time and in 2022. I think the other thing that’s worth mentioning on valuation methodology, as part of our consistent process, we’ve got a third-party valuation agent, excuse me, who is an expert in their respective space and they either perform the valuation exercise or provide positive assurance on those investments. So if you look at our history, we feel we’ve gotten that balance right and that our portfolio is certainly impacted by market movements as well as by inputs like interest rates and equity risk premiums that might impact DCFs offset over the course of the year by operating performance as well. And so I think it’s important really to understand that our methodology doesn’t change and it’s consistent quarter-over-quarter.
And in that respect, we feel really good that we’re delivering the right representative mark across our portfolio.
