Apollo Global Management Inc said on Thursday it had appointed former U.S. Securities and Exchange Commission (SEC) chief Jay Clayton as its lead independent director to improve corporate governance in the wake of an inquiry into Chairman Leon Black’s ties to late financier and convicted sex offender Jeffrey Epstein.
The review found that Black, who co-founded Apollo 31 years ago and turned it into one of the world’s largest private equity firms, had paid Epstein $158 million for advice on tax and estate planning and related services between 2012 and 2017.
While the probe, which was carried out by law firm Dechert LLP, cleared Black of any wrongdoing, he said last month he would relinquish his role as chief executive by July and keep his role as board chairman.
Clayton was selected due to his professional experience and understanding of private and public capital markets, Apollo said. He will assume the newly created role on March 1.
Apollo said last month it would look into changing its corporate governance structure, getting rid of shares with special voting rights that currently give Black and other co-founders effective control of the firm. The firm also added two new independent directors.
Clayton was SEC chairman from May 2017 to December 2020. In that role he pursued changes to regulations that critics saw as burdensome or hindering corporate growth, often in the face of opposition from investor advocates. Before that, Clayton was a corporate deals lawyer at Sullivan & Cromwell.
The Trump administration nominated Clayton last summer to replace a top federal prosecutor in New York, but did not press on with his appointment.
Eric Talley, a Columbia Law School professor, said that Clayton would have the heft to stand up to Black and other Apollo controlling partners if something “doesn’t square with his spidey sense.”
“If anyone can establish their independence in a controlled company it would be someone like Jay Clayton,” Talley said.
Clayton will earn about $500,000 annually through equity and fees for his service, according to a regulatory filing. Such compensation is high for a lead independent director, said Dan Laddin, a founding partner at consulting firm Compensation Advisory Partners LLC.
“He’s getting paid more akin to a non-executive chairman,” Laddin said.
Clayton is one of the most high-profile additions to Apollo since the 2014 departure of Marc Spilker, who was recruited as the firm’s president months after leaving Goldman Sachs Group Inc. Spilker left Apollo abruptly without any explanation.
The revelations of Black’s ties to Epstein led the firm’s executives to warn in October that some investors had paused their commitments to Apollo’s funds as they awaited the review’s findings.
The company, however, said in January that despite the controversy, its assets under management grew by $22 billion in the final quarter of 2020 to $455 billion.