Michael J Arougheti
Ares ManagementAbout Michael J Arougheti
Michael J. Arougheti is Co‑Founder, Chief Executive Officer, and a Director of Ares Management Corporation; age 52, Director since March 2014, and at Ares since 2004. He holds a B.A. in Ethics, Politics and Economics, cum laude, from Yale University and previously held senior roles at RBC Capital Partners, Indosuez Capital, and Kidder, Peabody & Co. . Under his leadership, Ares’ 5‑year total shareholder return turned a hypothetical $100 investment at year‑end 2019 into $585 by year‑end 2024 versus $215 for the Dow Jones U.S. Asset Managers peer index; 2024 Net Income was $440,961k and Fee Related Earnings (FRE) were $1,361,737k, reflecting strong fee‑based performance that underpins executive compensation alignment .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Royal Bank of Canada (RBC) | Managing Partner, Principal Finance Group (RBC Capital Partners); Mezzanine Investment Committee member | 2001–2004 | Oversaw team originating, managing, monitoring middle‑market leveraged loans and structured securities, aligning underwriting with institutional investor needs . |
| Indosuez Capital | Principal; Investment Committee member | 1994–2001 | Originated, structured, executed leveraged transactions across products/asset classes (debt/equity) . |
| Kidder, Peabody & Co. | M&A Group member | Pre‑1994 | M&A execution experience foundational to later principal finance/alternative investments . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Ares Capital Corporation | Executive Vice President & Director | Current | Governance and oversight at externally‑traded BDC; cross‑platform coordination . |
| Ares Acquisition Corporation II | Co‑Chairman | Current | SPAC leadership; origination and sponsor alignment . |
| Ares Commercial Real Estate Corporation | Director | 2011–2024 | Governance oversight in commercial real estate lending . |
| Ares Charitable Foundation | Director | Current | Aligns firm philanthropy with financial inclusion goals . |
| Operation HOPE | Director | Current | Financial empowerment in underserved communities . |
| PATH Organization | Leadership Council Member | Current | Global health engagement and network contributions . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | — | — | — |
| Cash Bonus ($) | — | — | — |
| All Other Compensation ($) | 20,873,100 | 16,848,590 | 22,753,842 (incl. $3,266,107 carried interest and $19,474,385 incentive fees; $10,350 401(k) match; $3,000 charitable match) |
Notes:
- No target or actual annual cash bonus disclosed for Arougheti during 2022–2024; compensation realized primarily through equity, carried interest, and incentive fees .
Performance Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Stock Awards ($) | 13,728,000 | 13,728,000 | 62,628,000 |
| RSU Grant Detail | Grant Date | Units | Grant Date Fair Value ($) | Vesting Schedule | Lock‑Up / Other Terms |
|---|---|---|---|---|---|
| Annual Service‑Based Award | 1/31/2024 | 300,000 | 13,728,000 | 4 equal installments on 1/31/2026–2029, subject to continued service and specified exceptions | Standard RSU terms under 2023 Plan . |
| Incentive Fee Agreement RSUs | 1/31/2024 | 400,000 | 48,900,000 | 4 equal installments on 6/30/2026–2029; continued service; full vest on Qualifying Termination | Shares issued before 6/30/2029 subject to lock‑up; release annually through 6/30/2029 . |
| Annual Service‑Based Award | 1/31/2023 | 300,000 | — | 4 equal installments on 1/31/2025–2028 | Standard . |
| Annual Service‑Based Award | 1/31/2022 | 300,000 | — | 4 equal installments on 1/31/2024–2027 | 75,000 vested by 12/31/2024 . |
| Annual Service‑Based Award | 1/22/2021 | 300,000 | — | 4 equal installments on 1/31/2023–2026 | 150,000 vested by 12/31/2024 . |
Performance linkage and metrics:
- Senior professionals participate in incentive fees (subject to fund hurdles/high‑water marks) and carried interest; awards align with long‑term fund performance and discourage excessive risk taking .
- Company lists key measures used to link pay and performance: Fee Related Earnings, After‑tax Realized Income per share, Assets Under Management, and Fund performance (non‑GAAP measures reconciled in Annex A) .
Equity Ownership & Alignment
| Ownership Item | Amount / Detail |
|---|---|
| Class A beneficial ownership | 1,400,000 restricted units (each convertible into one share upon vesting); less than 1% of Class A outstanding . |
| Outstanding unvested RSUs (12/31/2024) | 1,375,000 units; market value $243,416,250 at $177.03/share . |
| 2024 vesting realized | 150,000 units vested; value realized $18,222,000 . |
| Operating Group Units (held by Ares Owners on his behalf; disclaimed) | 9,021,596 Ares Operating Group Units (exchangeable into Class A subject to restrictions) . |
| Pledging/Hedging policy | Prohibits margin accounts, pledging, hedging, or speculative transactions without prior compliance approval . |
| Executive ownership guidelines | Independent director stock ownership guidelines exist; executive officer guidelines not disclosed . |
2024 co‑investments and distributions:
- Invested alongside Ares funds: $16,270,012; distributions received: $11,914,883, indicating significant “skin‑in‑the‑game” beyond carried interest .
Employment Terms
| Provision | Key Terms |
|---|---|
| Role/Tenure | Co‑Founder; at Ares since 2004; Director since March 2014 . |
| RSU change‑in‑control and termination | Annual Service‑Based Awards: 50% of then‑unvested vests on termination without cause, resignation for good reason, death or disability; 100% vest if Qualifying Termination within six months of change‑in‑control . |
| Incentive Fee Agreement RSUs | Any then‑unvested RSUs vest in full upon Qualifying Termination . |
| Non‑compete / non‑solicit | Non‑compete and client/employee non‑solicit tied to incentive fee arrangements; during employment and for two years thereafter . |
| Clawback policy | NYSE‑compliant clawback adopted in 2023; applies to incentive‑based compensation received on/after 10/2/2023 upon accounting restatement . |
Termination economics (as of 12/31/2024; ARES $177.03 close):
| Scenario | RSU Value Vesting ($) |
|---|---|
| Qualifying Termination | 157,114,125 |
| Death/Disability | 121,708,125 |
| Change‑in‑control + Qualifying Termination | 172,604,250 |
Board Governance
- Status: Non‑independent Director (CEO); Board separates CEO and Executive Chairman roles (Executive Chairman is Antony P. Ressler). Independent director presides at executive sessions .
- Committees: Member of the Nominating & Governance Committee; equity incentive committee member until dissolution (Feb 2025). Not a member of the Audit, Compensation, or Conflicts Committees .
- Attendance: Board held eight meetings in FY 2024; all directors attended at least 75% of meetings and attended the 2024 Annual Meeting .
- Controlled company: Holdco (co‑founders/deVeer) controls 80.67% combined voting power via Class B and Class C; Ares Ownership Condition satisfied in 2025 with 37.09% voting power of Designated Stock; Company avails itself of NYSE controlled company exemptions (e.g., nominating/governance not fully independent) .
Director compensation:
- As an executive (non‑independent), Arougheti receives no separate director compensation .
Pay vs Performance (Company context; PEO is Arougheti)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| PEO Summary Compensation Total ($) | 7,303,953 | 70,842,896 | 34,601,100 | 30,576,590 | 85,381,842 |
| Compensation Actually Paid to PEO ($) | 21,737,279 | 135,601,181 | 37,288,439 | 82,658,840 | 120,782,381 |
| Value of $100 Investment – Company TSR ($) | 138 | 245 | 213 | 383 | 585 |
| Value of $100 Investment – Peer Group TSR ($) | 115 | 162 | 127 | 156 | 215 |
| Net Income ($ thousands) | 130,442 | 386,748 | 167,541 | 474,326 | 440,961 |
| Fee Related Earnings (FRE) ($ thousands) | 431,231 | 712,308 | 994,350 | 1,163,741 | 1,361,737 |
Say‑on‑Pay:
- 2022 vote on FY 2021 compensation approved with ~91.3% support; frequency proposal in 2025 recommends every three years .
Compensation Structure Analysis
- Mix shift and equity intensity: Stock awards increased sharply in 2024 ($62.6m vs $13.7m 2023) driven by RSUs granted in exchange for reducing incentive fee allocations—an explicit trade of near‑term performance fee economics for longer‑dated equity vesting and lock‑up, strengthening retention and alignment .
- Options: Company does not currently grant options/SARs, avoiding repricing risk; any future option policy would be separately evaluated .
- Risk controls: Carried interest/incentive fee structures are multi‑year, hurdle/high‑water mark constrained, discouraging short‑term risk taking; Compensation Committee independent, uses Korn Ferry for benchmarking/equity framework .
Related Party Transactions
- Co‑investments: Personally invested $16.27m alongside Ares funds; received $11.91m distributions in 2024, consistent with alignment via capital at risk .
- Aircraft usage: Firm paid market/below‑market rates for co‑founders’ private aircraft business use (Ressler, Kaplan, Rosenthal); no aircraft payments disclosed for Arougheti .
- Exchange agreement: Operating Group Units exchangeable for Class A shares subject to restrictions; underpinning internal ownership mechanics .
Equity Vesting Schedules and Insider Selling Pressure
- Upcoming RSU unlocks: Annual service‑based tranches vest annually on 1/31/2025–2029; Incentive Fee RSUs vest annually on 6/30/2026–2029 with lock‑up on any shares issued prior to 6/30/2029, releasing in annual installments—mitigating near‑term selling pressure .
- 2024 realized vesting: 150,000 units vested ($18.22m) .
- Policy safeguards: Hedging/pledging generally prohibited; compliance approval required, reducing forced‑sale risk from margin/pledge dynamics .
Board Service History and Dual‑Role Implications
- Board service: Director since March 2014; non‑independent; member of Nominating & Governance Committee; former Equity Incentive Committee member until its dissolution in 2025 .
- Independence and control: Ares is a controlled company (80.67% combined voting power); Board separates CEO and Executive Chairman roles; independent director presides at executive sessions, though nominating/governance includes non‑independent executives per controlled company exemption—heightened governance scrutiny for independence/committee composition .
- Attendance: All directors ≥75% meeting attendance in 2024; all attended Annual Meeting .
Investment Implications
- Retention and alignment: Large unvested RSUs (1.375m units; $243.4m at 12/31/24) with staggered vesting and lock‑ups, plus carried interest/incentive fee mechanics and 2‑year non‑compete/non‑solicit, indicate low near‑term CEO departure risk and strong long‑term alignment with fund performance and FRE growth .
- Supply overhang: Annual RSU vesting cadence through 2029 and lock‑up releases temper insider selling pressure; realized vesting in 2024 was 150k units ($18.2m) .
- Governance: Controlled company structure and CEO as non‑independent director require reliance on independent committees (Audit, Compensation, Conflicts) and clawback/insider policies to mitigate governance risks; prior say‑on‑pay support (91.3%) suggests investor acceptance of pay design tied to growth .
- Performance: TSR outperformance vs peer index (2019–2024) and rising FRE support incentive‑linked pay; equity-for-incentive fee reallocation in 2024 signals confidence in long‑term value creation over near‑term fee capture .