Harvey Schwartz : So what I would say, again, we’re talking about incentive alignment across all our constituencies, pay for performance and really managing this process over a very long period of time. It’s not for a quarter or a year. And so again, when I said stock absorber, the way I think about the compensation ratio is it will be dynamic reflecting the performance. And we want to make sure that we are investing in our talent, rewarding our talent consistently. But there will be years where there’ll be lower realizations and you may see the compensation ratio tick up a little bit. We’re giving ourselves that flex. The most important thing about the financial targets we put out because I know that’s new is our confidence around the margin, the $1.1 billion FRE target and the fundraising.
And of course, obviously, the announcement around our share repurchase capacity. So we feel highly confident around those numbers, but we’re giving you some insight into how we think about things as a leadership team.
Brennan Hawken : Got it. Thank you. John, though, you referenced a phase-in period. Could you help us understand what that would look like?
John Redett : Yeah. I think Harvey covered that. I mean, look, it’s — we’re going to phase it in over a couple of years. We’re going to be very deliberate in terms of how we do this. This is — this is compensation. We’re a human capital business. It’s a very important component of our business. So you should think of it over a couple of years. And quite frankly, I don’t know what the markets look like. So we’re going to kind of react to how the markets are. Again, I think the important thing to walk away from is not only do we create better stockholder alignment. Our intent is not to pay people more or less. Our intent is really to have a performance-based, success-based compensation structure in place. And that’s what we’ve achieved with this structure.
Brennan Hawken : Great. Thanks for taking my questions.
John Redett : Thanks.
Operator: Thank you. Our next question comes from Will Katz with TD Cowen. Your line is open.
Bill Katz : Okay. Thank you very much for taking the questions, this morning.
Harvey Schwartz : Hi, Bill.
Bill Katz : So I was wondering if you could just unpack — good morning. And thank you again for the question. Just wondering if we could unpack the $40 billion just a little bit further. And I know you went through at a very broad level, but could you sort of underline just in terms of where you think you are in terms of Europe and Asia in terms of success of fund opportunity. And then perhaps you said this in your prepared comments, I missed it in the supplement. How many incremental shares are you issuing to management? And what are some of the sort of the key return assumption to test that stock? Thank you.
John Redett: Yeah. In terms — let me take the fundraising first. As Harvey said, in terms of investment solutions, we have great momentum in secondaries in co-investment. In terms of private equity, we have great demand for our Japan buyout fund. We’ll soon be in the market with our real estate product, which has fantastic returns. In terms of our Asia buyout and European buyout, look, I think they will continue to face in 2024, industry headwinds that we’re seeing in our peers are seeing as well. But we do have a couple of private equity products in the market that I think will be very well received with good demand. And I covered some of the multiple credit products in the market, which we’re very, very optimistic about. In terms of the PSUs. Again, these were targeted to the senior-most level professionals in Carlyle.
These professionals are really the individuals that are accountable for growth. And these are the individuals that are driving growth. I think these are very shareholder-friendly instruments. I think our shareholders will want these to vest. Think of it as roughly $300 million of value in the share price appreciation targets are 20%, 40% and 60%. Again, these are very shareholder-friendly instruments. If our share price doesn’t hit those targets, these shares do not vest.
Bill Katz : Thank you.
Operator: Thank you. Our next question comes from Daniel Fannon with Jefferies. Your line is open.
Daniel Fannon : Thanks, good morning. Wanted to follow up on non-comp expense. John, I think last quarter, you mentioned $40 million in run rate savings so far with more to come. Can you talk about kind of 2024 and what those numbers might look like and/or other initiatives you have in place to also complement that FRE margin expansion in addition to the comp stuff you announced today?
John Redett: Thanks, Daniel. Look, I think if you look at our fourth quarter margin of 43%, which is a record for us, I think it really shows the progress we’ve made. To be honest, I think we’ve made progress faster than I anticipated. We’re just going to continue to focus on expenses. We’re not done. We’re just going to manage the firm prudently in terms of expenses. I still think there’s some opportunity going into 2024. But look, more importantly, this isn’t going to be an expense story. We’re much more focused on growth. We’re investing in the businesses. But I would say there’s probably some additional opportunity on expenses that we’ll get out in 2024, but that’s not going to be the story. It’s going to be more about growth.
Daniel Fannon : Thank you.
John Redett : Thanks, Dan.
Operator: Thank you. Our next question comes from Steven Chubak with Wolfe Research. Your line is open.
Steven Chubak : Hi, good morning.
Harvey Schwartz : Hey, Steven.
Steven Chubak : Hey, John. I wanted to ask on the CLO business. The originations in the liquid credit business picked up nicely in 4Q, admittedly remains fairly subdued, but the outlook in the space appears to be improving. How has the deployment landscape evolve just given the improving capital markets backdrop that you cited? And how should we think about the pickup in that business as we look out to ’24?
