Brian Mckenna : Hey, Harvey, I know you’re deemphasizing performance income a bit just with the comp changes this morning. But I’m curious, how are you thinking about the rebuild of net accrued performance revenues over time? After a 20% apples-to-apples year-over-year decline in 2023 on the heels of solid realizations? And specifically, kind of that rebuild as it relates to the contribution from some of the more recent flagship private equity strategies?
John Redett : Yeah, Brian, it’s John. I wouldn’t say we’re deemphasizing performance revenue or carrier realization. It’s still — it’s still a very core component of our business, and we expect it to be a core component of our business going forward. You’re right, less of that is going to shareholders and more is going to employees and shareholders are getting more high-margin fee earnings as far as this comp reset. As I said in my remarks, we still have net accrued carry of roughly $2.4 billion which still represents $6 a share. I still think it’s a very meaningful percentage of our share price.
Brian Mckenna : Got it. Thank you.
Operator: Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.
Brian Bedell : Hi, great. Good morning, folks. Thanks for taking my question. And congrats on the comp change and FRE. Maybe just to talk about the FRE margin the range not comp range, but the actual margin target range of 40% to 50%. I guess, sort of what is at both ends of that, what would be the key variabilities. Because it’s a little bit wide for this year. And then in line with that, as we sort of march through ’24 and getting to ’25 and ’26 longer term, is the intent to show or to build on the FRE margin each year and have a sort of a longer term more steady growth profile to that? And if you can comment on the contribution from Capital Markets business. I know Harvey, you’ve been working on building that up. And it looks like you reported very good your transaction fee results just this fourth quarter as well.
Harvey Schwartz : So let me take a step back a little bit and just tell you how we’re thinking about it as a leadership team. First of all, thanks for noting the capital markets momentum, pretty muted environment actually for capital markets. The team really came together and embraced the focus. And we think that will carry through into 2024 for sure. In terms of the compensation model change and the range, one of the reasons why John is only out of that range is, first and foremost, for us, it’s about talent. It’s about attracting and retaining the best talent. We have an extraordinary team here. And we want to make sure that as we introduce this, we actually have the flexibility to make sure that we do this methodically patiently and overtime.
So you’ll see us move within this range and you’ll see periods of outperformance and periods where basically this access a shop, it’s over, but this is an output. We’re going to manage the talent and make sure our talent gets paid for their performance first and foremost. That’s the most critical thing, because that will deliver for everyone in the long run that will deliver for investing clients and that it’ll deliver for our shareholders. But that’s how we designed the model.
Brian Bedell: Thank you.
Daniel Harris : Take the next question, operator. I don’t think we can hear you. Who’s up? Operator, we’re ready for the next question.
Operator: Our next question comes from Ben Budish with Barclays. Your line is open.
Ben Budish : Hi, good morning. Thanks for taking the question. Harvey, in the deck, you identified Investment Solutions as one of your strategic initiatives. And I’m just curious, typically, we see sort of your two major funds kind of go and raise flagships around the same time. And so we see like very large pickup in AUM, followed by maybe a period of flatter AUM growth. You indicated that we should see a sharp upswing in 2024 in terms of FRE. But just curious, given that you identified that as a strategic initiative, how might that cadence change in 2025 and 2026? Does this mean potentially more vehicles or more sort of run-of-the-mill fundraising? What should we expect to see there? Thank you.
Harvey Schwartz : So in ’24, look, I showed up a year ago, literally almost everyday. And I was the lucky recipient of some amazing franchise businesses and some great talent. One of those things is our secondary business. And over the course of the year, their growth. And as we indicated in our prepared remarks, we’re expecting a doubling of FRE. It’s an incredibly talented team with a huge amount of momentum. There’s aspects of that business that we continue to build is a financing component in that business. Obviously, I mentioned the fact that we’ve just launched recently CAPM. I think this is a tremendous opportunity for wealth clients, it’s a diversified portfolio with really consistent performance. So I think you’ll just — you’ll see us grow this business in a prudent way. I think historically, maybe it didn’t get highlighted as much. But this is a really strong team with a lot of momentum.
Ben Budish : Understood. Thank you.
Operator: Thank you. Our next question comes from Brennan Hawken with UBS. Your line is open.
Brennan Hawken : Good morning. Thanks for taking my questions.
Harvey Schwartz : Hey, Brennan. How are you?
Brennan Hawken : I’m good, Harvey. I hope you’re doing well. So understanding you guys have touched on this a little bit, but I’m hoping maybe we could peel a little because you’ve made a couple of references to the comp change John indicated it was phased in over time. And Harvey, I believe you indicated that it was a function somewhat as a shock absorber. So I’m sure there’s nuance and layers to it, but maybe could you help us distill a little bit, what is the phase-in going to look overtime. And even once it’s fully phased is the entire range still in play allowing for the shock absorbers. Could you just help us understand the difference in between how those two will play out in the next coming years?
