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ET or anyone else,

Two questions. First is on dilution/share buyback.

BX has stated that they would like to have zero dilution. Basically, buyback as many shares as they issue in compensation. I think BX should buyback at least that amount, and so I am happy with that approach.

I am having a bit of trouble reconciling their statements with the equity compensation costs. As I see it, BX has an equity compensation expense of about $181 million over the last 12 months. That's high (above 10% of net income), but I think that is to be expected. Also, in the range that would allow for an 85% payout ratio - 85% to distributions; 10%+ to buyback; a few percent left over.

On the call they mention 18 million shares being bought back in the LTM. That's $540 million, or about 3-times as many shares as I would have thought needed to cover the compensation expense. I'm looking to reconcile the numbers.

Looks like they reduced the share count over the LTM - about 6 million fewer DE participating units. BX buys back only common, but some partnership convert to common??

The reduced sharecount could get me a bit closer to reconciling. Perhaps management reduced the sharecount in the recent past due to a low unit price, but discusses zero-dilution as that's all they want to semi-commit to. Still leaves me a bit short though.

Any comments would be appreciated.

Second one is simpler. I believe the conversion moots any carried income tax changes for BX. That is, BX will no longer get any special treatment for carried income, and so any change to eliminate the tax treatment is irrelevant. Looking for confirmation or correction.

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