Carlyle Group Inc. (CG) FY 2021 MD&A

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P. into a Delaware corporation named The Carlyle Group Inc. Pursuant to the Conversion, at the specified effective time on January 1, 2020, each common unit of The Carlyle Group L.P. outstanding immediately prior to the effective time converted into one share of common stock of The Carlyle Group Inc. and each special voting unit and general partner unit was canceled for no consideration. In addition, holders of the partnership units in Carlyle Holdings I L.P., Carlyle Holdings II L.P., and Carlyle Holdings III L.P. exchanged such units for an equivalent number of shares of common stock and certain other restructuring steps occurred (the conversion, together with such restructuring steps and related transactions, the “Conversion”).

Unless the context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us” and “our” refer (i) prior to the consummation of the Conversion to The Carlyle Group L.P. and its consolidated subsidiaries and (ii) from and after the consummation of the Conversion to The Carlyle Group Inc. and its consolidated subsidiaries. References to our common stock in periods prior to the Conversion refer to the common units of The Carlyle Group L.P.

The following discussion should be read in conjunction with the consolidated financial statements and the related notes included in this Annual Report on Form 10-K.

Overview

We conduct our operations through three operating segments: Global Private Equity, Global Credit, and Global Investment Solutions.

•Global Private Equity — Our Global Private Equity segment advises our 37 buyout and middle market and growth capital funds, our 12 U.S. and internationally focused real estate funds, our 14 natural resources funds, and our three Legacy Energy funds. The segment also includes three NGP Predecessor Funds and five NGP Carry Funds advised by NGP. As of December 31, 2021, our Global Private Equity segment had $162.1 billion in AUM and $104.3 billion in Fee-earning AUM.

•Global Credit — Our Global Credit segment advises a group of 87 funds that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, distressed credit, aircraft financing and servicing, infrastructure debt, insurance solutions and global capital markets. As of December 31, 2021, our Global Credit segment had $73.4 billion in AUM and $51.7 billion in Fee-earning AUM.

•Global Investment Solutions — Our Global Investment Solutions segment advises global private equity programs and related co-investment and secondary activities across 303 fund vehicles. As of December 31, 2021, our Global Investment Solutions segment had $65.5 billion in AUM and $37.4 billion in Fee-earning AUM.

We earn management fees pursuant to contractual arrangements with the investment funds that we manage and fees for transaction advisory and oversight services provided to portfolio companies of these funds. We also typically receive a performance fee from an investment fund, which may be either an incentive fee or a special residual allocation of income, which we refer to as a carried interest, in the event that specified investment returns are achieved by the fund. Under U.S. generally accepted accounting principles (“U.S. GAAP”), we are required to consolidate some of the investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these investment funds. Accordingly, our segment revenues primarily consist of fund management and related transaction and portfolio advisory fees and other income, realized performance revenues (consisting of incentive fees and carried interest allocations), realized principal investment income, including realized gains on our investments in our funds and other trading securities, as well as interest income. Our segment expenses primarily consist of cash compensation and benefits expenses, including salaries, bonuses, and realized performance payment arrangements, and general and administrative expenses. While our segment expenses include depreciation and interest expense, our segment expenses exclude acquisition- and disposition-related charges and amortization of intangibles and impairment. Refer to Note 15 to the consolidated financial statements included in this Annual Report on Form 10-K for more information on the differences between our financial results reported pursuant to U.S. GAAP and our financial results for segment reporting purposes.

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Trends Affecting our Business

The year 2021 was an economic recovery year as the pandemic lockdowns eased and the world economy exited the pandemic recession, with boosts in cyclical sectors like industrials, materials and energy, which were also bolstered by the resurgence of inflation. Corporate earnings in 2021 exceeded expectations driven by large productivity gains stemming from investments in digitization and technology, which more than offset input price inflation and powered margin expansion. Current estimates anticipate S&P 500 constituents’ 2021 full year earnings growth in excess of 45%. This robust performance, coupled with fiscal stimulus and ultra-low interest rates, buoyed global equity markets in the aggregate in 2021. The Dow Jones, S&P 500, and Nasdaq 100 rose 18.7%, 26.9%, and 26.6% respectively in 2021. Globally, the MSCI ACWI, EuroStoxx 600 and Shanghai Composite rose 16.8%, 22.3%, and 4.8% respectively over the same period. In contrast to corporate earnings, while overall economic activity was generally strong in 2021, top line growth was hampered by ongoing pandemic-related restrictions, supply chain bottlenecks, labor shortages, and slowing consumption.

In the fourth quarter of 2021, the prospect of earlier and more aggressive monetary policy tightening in response to rising inflation drove renewed interest rate volatility. Thus far in 2022, 10-year Treasury yields have risen 44 basis points to 1.96% as of February 8, 2022, as higher than expected inflation in December 2021 increased the likelihood and anticipated frequency of increases to the federal funds rate. Futures markets have now priced in more than five to six rate hikes in 2022 and two to three hikes in 2023. Treasury market volatility, however, has not yet translated into corporate bond market distress and financing markets remain favorable and open. Single B-rated and sub-investment grade U.S corporate spreads actually declined 13 and 5 basis points in the fourth quarter of 2021, respectively, and remain near historic lows. Single B-rated yields are 300 to 375 basis points below long-term averages and leveraged loan prices are higher than they were before the pandemic. Equity market volatility, on the other hand, has risen with Treasury market volatility, and returns year-to-date in 2022 are down significantly. The NASDAQ 100 is officially in correction territory, while the S&P 500 is down 5% as of February 8, 2022. The prices of companies in the NASDAQ most exposed to interest rate risk – namely, those with cash flows weighted far into the future – are down 14% year-to-date, and down 43% since their 2021 peak.

Labor market tightness persists across our portfolio, with a U.S. labor force participation rate still 1.2 percentage points below its pre-pandemic peak and a shortfall of roughly 3 million eligible workers. Both producer and consumer prices continue to climb driven by capacity constraints in physical supply chains and such price increases are now a key focus for central banks. In the U.S., December 2021 CPI inflation reached 7% year-over-year, the highest level in four decades, while inflation in the UK and Canada hit 30-year highs. Producer prices in the U.S. and Japan are also rising at the fastest rate since the early 1980s. In Europe, and Germany in particular, where an energy crisis is compounding supply chain-driven pressures, producer prices are rising at the fastest rate on record. Overall, household spending is liquid in a way the underlying economy is not. Money intended to be spent on services and live experiences has instead largely been spent on durable goods. However, unused services capacity cannot be transformed frictionlessly into goods production. Supply-side scope can only adjust over time through an increase in factories, equipment, trained workers, and logistics network capacity. Many companies have been hesitant to make this investment, as demand for goods seems likely to be only temporarily boosted by pandemic-era restrictions and risk aversion. This imbalance of demand and underlying capacity constraints has likely contributed to today’s inflation. Price pressures seem unlikely to abate until spending patterns realign with supply-side dynamics.

Asia, including China, remains an important component of Carlyle’s investment platform. The Chinese economy grew 4% year-over-year in the fourth quarter of 2021, down from 7.9% and 4.9% in the second and third quarters of 2021, respectively. The slowdown is partially attributable to a sharp decline in real estate development activity and sales with housing prices in China falling at the fastest rate since mid-2015. Carlyle’s current exposure to the real estate sector in China and its constituent businesses is insignificant. Market adjustments to-date mainly reflect increases in the risk premium investors earn for China exposure rather than deterioration in company-specific fundamentals.

Our carry fund portfolio continued to build on the strong momentum we have generated throughout the year. Within our Global Private Equity segment, our corporate private equity funds appreciated 6% in the fourth quarter and 41% for the year, reflecting strong performance across the portfolio and our real estate funds appreciated 11% during the fourth quarter and 39% for the year. Our natural resources funds appreciated by 7% in the fourth quarter due to strong commodity pricing, with appreciation of 34% for the year. In our Global Credit segment, our carry funds (which represent approximately 18% of the total Global Credit remaining fair value) appreciated 1% in the fourth quarter and 22% for the year. Global Investment Solutions appreciation was 7% in the fourth quarter and 48% for the year, though the valuations of our primary and secondary funds of funds generally reflect investment fair values on a one-quarter lag. While our publicly traded investments appreciated 30% during the year, they were flat in the fourth quarter and were lower in the early part of January 2022, reflecting the equity market sell-off in the first weeks of 2022.

We reached record levels of realized proceeds in 2021, generating $15.3 billion in realized proceeds from our carry funds in the fourth quarter and $44.3 billion for the year. Alongside the robust portfolio appreciation in 2021, this contributed to

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record realized net performance revenues as well as record realized investment income recognized in the quarter, surpassing records set in the third quarter of 2021, as well as for the year overall.

Driven by positive impact from valuations across the portfolio, net accrued performance revenues on our balance sheet increased to $3.9 billion at December 31, 2021, up 67% since December 31, 2020 despite record levels of realizations during 2021. The portion of our traditional carry funds attributable to publicly traded companies is 11% of fair value as of December 31, 2021, compared to 15% of fair value as of December 31, 2020 and 6% as of December 31, 2019. While the share of our total fair value in publicly traded investments has started to decline with realizations, it remains a meaningful component of our portfolio, and to the extent that there is continued volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters.

Capital deployment was at record levels across the entire private equity industry during 2021. During the fourth quarter, our carry funds invested $13.8 billion in new or follow-on transactions and we invested a record $33.8 billion for the full year 2021. While high levels of industry dry powder and widely available financing are likely to foster an increasingly competitive market, we believe our investment platform will enable us to pivot quickly to pursue opportunities where we have identified dislocation, which positions us to continue to deploy capital throughout 2022.

During 2021, we raised $51.3 billion in new capital, which included the launch of two key U.S. buyout and growth funds, CP VIII and CP Growth, and our ninth U.S. real estate fund, CRP IX. We also saw a record level of CLO issuances in our Global Credit segment, and continued strength in our Global Investment Solutions segment, particularly in separately managed accounts. The pace of capital deployment has resulted in fund products coming back to market faster than ever before, and limited partners have an increasing array of investment opportunities to consider. As a result, we anticipate the fundraising landscape to become increasingly competitive as limited partners balance allocation limits with more offerings.

We are closely evaluating the financial and other proposals put forth by the current Administration and Congress and their potential impacts on our business. While there may be changes to current tax and regulatory regimes, additional fiscal stimulus packages could be followed by longer-term spending increases on infrastructure, climate, health care and education. The potential for policy changes may create regulatory uncertainty for our portfolio companies and our investment strategies and adversely affect the profitability of our portfolio companies.

Recent Transactions

In February 2022, our Global Credit platform agreed to acquire a diversified portfolio of triple net leases for an enterprise value of $3 billion through a Carlyle-affiliated investment fund as part of the expansion of our real estate credit strategy. The investment fund’s acquisition of the portfolio will be funded using $2 billion in debt and $1 billion in equity. The debt is non-recourse to us and Carlyle, as general partner of the investment fund, will contribute up to $200 million as a minority interest balance sheet investment. The transaction is expected to close in the first quarter of 2022.

Dividends

In February 2022, the Board of Directors declared a quarterly dividend of $0.25 per common share to common stockholders of record at the close of business on February 15, 2022, payable on February 23, 2022.

In February 2022, the Board of Directors approved an increase in the anticipated common stock dividend to an annual rate of $1.30 per share ($0.325 per common share on a quarterly basis), anticipated to commence for the first quarter 2022 dividend, which is anticipated to be paid in May 2022.

Key Financial Measures

Our key financial measures are discussed in the following pages. Additional information regarding these key financial measures and our other significant accounting policies can be found in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K.

Revenues

Revenues primarily consist of fund management fees, incentive fees, investment income (including performance allocations, realized and unrealized gains of our investments in our funds and other principal investments), as well as interest and other income.

Fund Management Fees. Fund management fees include management fees and transaction and portfolio advisory fees.

We earn management fees for advisory services we provide to funds in which we hold a general partner interest or with which

we have an investment advisory or investment management agreement. Additionally, management fees include catch-up

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management fees, which are episodic in nature and represent management fees charged to fund investors in subsequent closings

of a fund which apply to the time period between the fee initiation date and the subsequent closing date. Approximately 90% of

our fee revenue is in the form of management fees from traditional closed-end, long-dated funds, which are highly predictable

and stable, and do not have significant exposure to the underlying fund valuations. More than 95% of our Fee-earning

AUM is in fund structures with contractual lives of generally ten years, and is not subject to redemption without cause.

Management fees attributable to Carlyle Partners VII, L.P. (“CP VII”), our seventh U.S. buyout fund with approximately $15.3 billion of Fee-earning AUM as of December 31, 2021, was 15% of total management fees recognized during the year ended December 31, 2021, and 17% during the years ended December 31, 2020 and 2019. No other fund generated over 10% of total management fees in the periods presented.

Fund management fees exclude the reimbursement of any partnership expenses paid by the Company on behalf of the Carlyle funds pursuant to the limited partnership agreements, including amounts related to the pursuit of actual, proposed, or unconsummated investments, professional fees, expenses associated with the acquisition, holding and disposition of investments, and other fund administrative expenses.

Transaction and Portfolio Advisory Fees. Transaction and portfolio advisory fees generally include fees we receive for the transaction and portfolio advisory services we provide to our portfolio companies. When covered by separate contractual agreements, we recognize transaction and portfolio advisory fees for these services when the performance obligation has been satisfied and collection is reasonably assured. We are required to offset our fund management fees earned by a percentage of the transaction and advisory fees earned, which we refer to as the “rebate offsets.” Historically, such rebate offset percentages generally approximated 80% of the fund’s portion of the transaction and advisory fees earned. However, the percentage of transaction and portfolio advisory fees we share with our investors on our recent vintage funds has generally increased, and as such the rebate offset percentages generally range from 80% to 100% of the fund’s portion of the transaction and advisory fees earned, such that a larger share of the transaction fee revenue we retain is driven by co-investment activity. In addition, Carlyle Global Capital Markets (“GCM”) generates capital markets fees in connection with activities related to the underwriting, issuance and placement of debt and equity securities, and loan syndication for our portfolio companies and third-party clients, which are generally not subject to rebate offsets with respect to our most recent vintages (but are subject to the rebate offsets set forth above for older funds). Underwriting fees include gains, losses and fees arising from securities offerings in which we participate in the underwriter syndicate. The recognition of portfolio advisory fees, transactions fees, and capital markets fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our investment pace.

Incentive Fees. Incentive fees consist of performance-based incentive arrangements pursuant to management contracts, primarily from certain of our Global Credit funds, when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has been achieved.

Investment Income. Investment income consists of our performance allocations as well as the realized and unrealized gains and losses resulting from our equity method investments and other principal investments.

Performance allocations consist principally of the performance-based capital allocation from fund limited partners to us, commonly referred to as carried interest, from certain of our investment funds, which we refer to as the “carry funds.” Carried interest revenue is recognized by Carlyle upon appreciation of the valuation of our funds’ investments above certain return hurdles as set forth in each respective partnership agreement and is based on the amount that would be due to us pursuant to the fund partnership agreement at each period end as if the funds were liquidated at such date. Accordingly, the amount of carried interest recognized as performance allocations reflects our share of the fair value gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. As a result, the performance allocations earned in an applicable reporting period are not indicative of any future period, as fair values are based on conditions prevalent as of the reporting date. Refer to “ — Trends Affecting our Business” for further discussion.

In addition to the performance allocations from our Global Private Equity funds and closed-end carry funds in the Global Credit segment, we are also entitled to receive performance allocations from our Global Investment Solutions, Carlyle Aviation and NGP Carry Funds. We also retained our interest in the net accrued performance allocations of existing funds at the time of the sale of MRE. The timing of performance allocations realizations for these funds is typically later than in our other carry funds based on the terms of such arrangements.

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Our performance allocations are generated by a diverse set of funds with different vintages, geographic concentration, investment strategies and industry specialties. For an explanation of the fund acronyms used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, refer to “Item 1. Business — Our Family of Funds.”

Performance allocations in excess of 10% of the total for the years ended December 31, 2021, 2020 and 2019 were generated from the following funds:

No other fund generated over 10% of performance allocations in the periods presented above. Performance allocations from CP VI during 2021 were driven by appreciation across the portfolio, with notable increases in the values of the publicly traded investments in the portfolio and sale transactions of privately held investments.

Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any carried interest in respect of the historical investments and commitments to our fund vehicles that existed as of July 1, 2011 (including any options to increase any such commitments exercised after such date). We are entitled to 15% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and 2020, except in certain instances, and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties). In certain instances, carried interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in the Netherlands.

Realized carried interest may be clawed back or given back to the fund if the fund’s investment values decline below certain return hurdles, which vary from fund to fund. When the fair value of a fund’s investments remains constant or falls below certain return hurdles, previously recognized performance allocations are reversed. In all cases, each investment fund is considered separately in evaluating carried interest and potential giveback obligations. For any given period, performance allocations revenue on our statement of operations may include reversals of previously recognized performance allocations due to a decrease in the value of a particular fund that results in a decrease of cumulative performance allocations earned to date. Since fund return hurdles are cumulative, previously recognized performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate. Additionally, unrealized performance allocations reverse when performance allocations are realized, and unrealized performance allocations can be negative if the amount of realized performance allocations exceed total performance allocations generated in the period. For the years ended December 31, 2021, 2020 and 2019, the reversals of performance allocations were $48.2 million, $401.5 million and $215.8 million, respectively.

As of December 31, 2021, accrued performance allocations and accrued giveback obligations were approximately $8.1 billion and $30.2 million, respectively. Each balance assumes a hypothetical liquidation of the funds’ investments at December 31, 2021 at their then current fair values. These assets and liabilities will continue to fluctuate in accordance with the fair values of the funds’ investments until they are realized. As of December 31, 2021, $14.1 million of the accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to the Company is $16.1 million. The Company uses “net accrued performance revenues” to refer to the aggregation of the accrued performance allocations and incentive fees net of (i) accrued giveback obligations, (ii) accrued performance allocations and incentive fee-related compensation, (iii) performance allocations and incentive fee-related tax obligations, and (iv) accrued performance allocations and incentive fees attributable to non-controlling interests and excludes any net accrued performance allocations and incentive fees that have been realized but will be collected in subsequent periods. The net accrued performance revenues as of December 31, 2021 are $3.9 billion.

In addition, realized performance allocations may be reversed in future periods to the extent that such amounts become subject to a giveback obligation. If at December 31, 2021, all investments held by our carry funds were deemed worthless, the

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amount of realized and previously distributed performance allocations subject to potential giveback would be approximately $1.5 billion, on an after-tax basis where applicable, of which approximately $0.7 billion would be the responsibility of current and former senior Carlyle professionals. See the related discussion of within “— Liquidity and Capital Resources—Contingent Obligations (Giveback).”

The following table summarizes the total amount of aggregate giveback obligations that we have realized since Carlyle’s inception. Given various current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships are responsible for paying the majority of the realized giveback obligation, the table below also summarizes the amount that was attributable to the Company:

The funding for employee obligations and givebacks related to carry realized pre-IPO is primarily through a collection of employee receivables related to giveback obligations and from non-controlling interests for their portion of the obligation. The realization of giveback obligations for the Company’s portion of such obligations reduces Distributable Earnings in the period realized and negatively impacts earnings available for distributions to shareholders in the period realized. Further, each individual recipient of realized carried interest typically signs a guarantee agreement or partnership agreement that personally obligates such person to return his/her pro rata share of any amounts of realized carried interest previously distributed that are later clawed back. Accordingly, carried interest as performance allocation compensation is subject to return to the Company in the event a giveback obligation is funded. Generally, the actual giveback liability, if any, does not become due until the end of a fund’s life.

Each investment fund is considered separately in evaluating carried interest and potential giveback obligations. As a result, performance allocations within funds will continue to fluctuate primarily due to certain investments within each fund constituting a material portion of the carry in that fund. Additionally, the fair value of investments in our funds may have substantial fluctuations from period to period.

In addition, in our discussion of our non-GAAP results, we use the term “realized net performance revenues” to refer to realized performance allocations and incentive fees from our funds, net of the portion allocated to our investment professionals, if any, and certain tax expenses associated with carried interest attributable to certain partners and employees, which are reflected as realized performance allocations and incentive fees related compensation expense. See “— Non-GAAP Financial Measures” for the amount of realized performance revenues recognized each period. See “— Segment Analysis” for the realized performance revenues by segment and related discussion for each period.

Investment income also represents the realized and unrealized gains and losses on our principal investments, including our investments in Carlyle funds that are not consolidated, as well as any interest and other income. As it relates to our investments in NGP, investment income also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee, as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee. Principal investment income also included our proportionate share of U.S. GAAP earnings from our strategic investment in Fortitude prior to the contribution of our investment to a Carlyle-affiliated investment fund (see Note 4 to the consolidated financial statements in Part II, Item 8 of this Form 10-K). Realized principal investment income (loss) is recorded when we redeem all or a portion of our investment or when we receive or are due cash income, such as dividends or distributions. A realized principal investment loss is also recorded when an investment is deemed to be worthless. Unrealized principal investment income (loss) results from changes in the fair value of the underlying investment, as well as the reversal of previously recognized unrealized gains (losses) at the time an investment is realized.

Fair Value Measurement. U.S. GAAP establishes a hierarchal disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with

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readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

The table below summarizes the valuation of investments and other financial instruments included within our AUM, by segment and fair value hierarchy levels, as of December 31, 2021:

Interest and Other Income of Consolidated Funds. Interest and other income of Consolidated Funds primarily represents the interest earned on CLO assets. The Consolidated Funds are not the same entities in all periods presented. The Consolidated Funds in future periods may change due to changes in fund terms, formation of new funds, and terminations of funds.

Net Investment Gains of Consolidated Funds. Net investment gains of Consolidated Funds measures the change in the difference in fair value between the assets and the liabilities of the Consolidated Funds. A gain (loss) indicates that the fair value of the assets of the Consolidated Funds appreciated more (less), or depreciated less (more), than the fair value of the liabilities of the Consolidated Funds. A gain or loss is not necessarily indicative of the investment performance of the Consolidated Funds and does not impact the management or incentive fees received by Carlyle for its management of the Consolidated Funds. The portion of the net investment gains (losses) of Consolidated Funds attributable to the limited partner investors is allocated to non-controlling interests. Therefore a gain or loss is not expected to have a material impact on the revenues or profitability of the Company. Moreover, although the assets of the Consolidated Funds are consolidated onto our balance sheet pursuant to U.S. GAAP, ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us. Therefore, a gain or loss from the Consolidated Funds generally does not impact the assets available to our common stockholders.

Expenses

Compensation and Benefits. Compensation includes salaries, bonuses, equity-based compensation, and performance payment arrangements. Bonuses are accrued over the service period to which they relate.

We recognize as compensation expense the portion of performance allocations and incentive fees that are due to our employees, senior Carlyle professionals, advisors, and operating executives in a manner consistent with how we recognize the performance allocations and incentive fee revenue. These amounts are accounted for as compensation expense in conjunction with the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of the accrued compensation and benefits liability. Compensation in respect of performance allocations and incentive fees is paid when the related performance allocations and incentive fees are realized, and not when such performance allocations and incentive fees are accrued. The funds do not have a uniform allocation of performance allocations and incentive fees to our employees, senior Carlyle professionals and operating executives. Therefore, for any given period, the ratio of performance allocations and incentive fee compensation to performance allocations and incentive fee revenue may vary based on the funds generating the performance allocations and incentive fee revenue for that period and their particular allocation percentages.

In addition, we have implemented various equity-based compensation arrangements that require senior Carlyle professionals and other employees to vest ownership of a portion of their equity interests over a service period of generally one to four years, which under U.S. GAAP will result in compensation charges over current and future periods. During 2019 and 2020, we granted fewer equity awards than we have previously. In 2021, we granted 7.1 million in long-term strategic restricted stock units to certain senior professionals. The majority of these restricted stock units are subject to vesting based on the

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achievement of annual performance targets over four years which align with our strategic plan announced at our investor day in February 2021, with a larger proportion of the awards vesting based on the 2024 performance year. As a result, the number of restricted stock units granted in 2021 is higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years. Compensation charges associated with all equity-based compensation grants are excluded from Fee Related Earnings and Distributable Earnings.

We may hire additional individuals and overall compensation levels may correspondingly increase, which could result in an increase in compensation and benefits expense. As a result of prior acquisitions, we have charges associated with contingent consideration taking the form of earn-outs and profit participation, some of which are reflected as compensation expense.

General, Administrative and Other Expenses. General, administrative, and other expenses include occupancy and equipment expenses and other expenses, which consist principally of professional fees, including those related to our global regulatory compliance program, external costs of fundraising, travel and related expenses, communications and information services, depreciation and amortization (including intangible asset amortization and impairment) and foreign currency transactions. We expect that general, administrative and other expenses will vary due to infrequently occurring or unusual items, such as impairment of intangible assets or lease right-of-use assets and expenses or insurance recoveries associated with litigation and contingencies. Also, in periods of significant fundraising, to the extent that we use third parties to assist in our fundraising efforts, our general, administrative and other expenses may increase accordingly. Similarly, our general, administrative and other expenses may increase as a result of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development. Additionally, we anticipate that general, administrative and other expenses will fluctuate from period to period due to the impact of foreign exchange transactions.

We also could incur additional expenses in the future related to our acquisitions including amortization of acquired intangibles and earn-outs to equity holders. As discussed in Note 5 to the consolidated financial statements, we evaluate our intangible assets (including goodwill) for impairment and could record additional impairment losses in future periods.

Interest and Other Expenses of Consolidated Funds. The interest and other expenses of Consolidated Funds consist primarily of interest expenses related primarily to our CLO loans, professional fees and other third-party expenses.

Income Taxes. Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized.

Following the Conversion on January 1, 2020, all of the income before provision for income taxes attributable to The Carlyle Group Inc. is subject to U.S. federal, state, and local corporate income taxes. Prior to the Conversion, the Company was generally organized as a series of pass through entities pursuant to the United States Internal Revenue Code. As such, the Company was not responsible for the tax liability due on certain income earned during the year. Such income was taxed at the unitholder and non-controlling interest holder level, and any income tax was the responsibility of the unitholders and was paid at that level. See Note 10 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for more information regarding the impact of the Conversion.

In the normal course of business, we are subject to examination by federal and certain state, local and foreign tax regulators. With a few exceptions, as of December 31, 2021, our U.S. federal income tax returns for the years 2018 through 2020 are open under the normal three-years statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit from 2016 to 2020. Foreign tax returns are generally subject to audit from 2011 to 2020. Certain of our affiliates are currently under audit by federal, state and foreign tax authorities.

Non-controlling Interests in Consolidated Entities. Non-controlling interests in consolidated entities represent the component of equity in consolidated entities not held by us. These interests are adjusted for general partner allocations.

Prior to the Conversion, we recorded significant non-controlling interests in Carlyle Holdings relating to the ownership interests of the limited partners of the Carlyle Holdings partnerships. The Company, through wholly owned subsidiaries, was the sole general partner of Carlyle Holdings. Accordingly, the Company consolidated the financial position and results of operations of Carlyle Holdings into its financial statements, and the other ownership interests in Carlyle Holdings are reflected as a non-controlling interest in the Company’s financial statements. The limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group

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Inc. as part of the Conversion. As a result, following the Conversion the consolidated financial statements of The Carlyle Group Inc. do not reflect any non-controlling interests in Carlyle Holdings.

Earnings Per Common Share. We compute earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share is calculated by dividing net income (loss) attributable to the common shares of the Company by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all dilutive securities. We apply the treasury stock method to determine the dilutive weighted-average common shares represented by unvested restricted stock units. For certain equity-based compensation awards that contain performance or market conditions, the number of contingently issuable common shares is included in diluted earnings per common share based on the number of common shares, if any, that would be issuable under the terms of the awards if the end of the reporting period were the end of the contingency period, if the result is dilutive.

Prior to the Conversion, we applied the “if-converted” method to the Carlyle Holdings partnership units to determine the dilutive weighted-average common shares outstanding. Subsequent to the Conversion, the Company has a single class of stock and therefore, the “if-converted” method is no longer applied in the computation of diluted earnings per share.

Non-GAAP Financial Measures

Distributable Earnings. Distributable Earnings, or “DE”, is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of our three segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional measure to assess performance.

Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes certain tax expenses associated with performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interest in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items. Charges (credits) related to Carlyle corporate actions and non-recurring items include: charges associated with acquisitions, dispositions or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts and contingent consideration including gains and losses associated with the estimated fair value of contingent consideration issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. We believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed further under “—Consolidated Results of Operations” prepared in accordance with U.S. GAAP.

Fee Related Earnings. Fee Related Earnings, or “FRE”, is a component of DE and is used to assess the ability of the business to cover direct base compensation and operating expenses from total fee revenues. FRE differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts DE to exclude net realized performance revenues, realized principal investment income from investments in Carlyle funds, net interest (interest income less interest expense), and certain general, administrative and other expenses when the timing of any future payment is uncertain.

Operating Metrics

We monitor certain operating metrics that are common to the asset management industry.

Fee-earning Assets under Management. Fee-earning assets under management or Fee-earning AUM refers to the assets we manage or advise from which we derive recurring fund management fees. Our Fee-earning AUM is generally based on one of the following, once fees have been activated:

(a)the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired, for AlpInvest carry funds during the commitment fee period and for Metropolitan carry funds during the weighted-average investment period of the underlying funds (see “Fee-earning AUM based on capital commitments” in the table below for the amount of this component at each period);

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(b)the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-investment vehicles where the original investment period has expired, Metropolitan carry funds after the expiration of the weighted-average investment period of the underlying funds, and one of our business development companies (see “Fee-earning AUM based on invested capital” in the table below for the amount of this component at each period);

(c)the amount of aggregate fee-earning collateral balance at par of our CLOs and other securitization vehicles, as defined in the fund indentures (typically exclusive of equities and defaulted positions) as of the quarterly cut-off date;

(d)the external investor portion of the net asset value of certain carry funds (see “Fee-earning AUM based on net asset value” in the table below for the amount of this component at each period);

(e)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period); and

(f)the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee period has expired and certain carry funds where the investment period has expired, (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period).

The table below details Fee-earning AUM by its respective components at each period.

(1)Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.

(2)Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Global Investment Solutions funds.

(3)Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.

(4)Reflects the net asset value of certain other carry funds.

(5)Includes funds with fees based on gross asset value.

(6)Energy III, Energy IV, and Renew II (collectively, the “Legacy Energy Funds”) are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisers to each of the Legacy Energy Funds. Carlyle has a minority representation on the management committees of Energy IV and Renew II. Carlyle and Riverstone each hold half of the seats on the management committees of Energy III, but the investment period for this fund has expired and the remaining investments in such fund are being disposed of in the ordinary course of business. As of December 31, 2021, the Legacy Energy Funds had, in the aggregate, approximately $0.2 billion in AUM and $0.4 billion in Fee-earning AUM. We are no longer raising capital for the Legacy Energy Funds and expect these balances to continue to decrease over time as the funds wind down.

(7)Ending balance excludes $15.9 billion of pending Fee-earning AUM for which fees have not yet been activated.

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The table below provides the period to period rollforward of Fee-earning AUM.

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and runoff of CLO collateral balances. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. Outflows also reflect the sale of Metropolitan on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value, as well as activity of funds with fees based on gross asset value.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for each of the periods presented by segment.

Assets under Management. Assets under management or “AUM” refers to the assets we manage or advise. Our AUM equals the sum of the following:

(a) the aggregate fair value of our carry funds and related co-investment vehicles, NGP Predecessor Funds and separately managed accounts, plus the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital commitments to those funds and vehicles;

(b)     the amount of aggregate collateral balance and principal cash at par or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);

(c)     the net asset value of certain carry funds; and

(d)     the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those vehicles.

We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone, the NGP Energy Funds that are advised by NGP, as well as capital raised from a strategic third-party investor which directly invests in Fortitude alongside a carry fund.

For most of our carry funds, total AUM includes the fair value of the capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original

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investment period for the fund has expired. As such, Fee-earning AUM may be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments.

Our calculations of AUM and Fee-earning AUM may differ from the calculations of other asset managers. As a result, these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.

We generally use Fee-earning AUM as a metric to measure changes in the assets from which we earn recurring management fees. Total AUM tends to be a better measure of our investment and fundraising performance as it reflects investments at fair value plus available capital.

Available Capital. Available Capital refers to the amount of capital commitments available to be called for investments, which may be reduced for equity invested that is funded via a fund credit facility and expected to be called from investors at a later date, plus any additional assets/liabilities at the fund level other than active investments. Amounts previously called may be added back to available capital following certain distributions. “Expired Available Capital” occurs when a fund has passed the investment and follow-on periods and can no longer invest capital into new or existing deals. Any remaining Available Capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that are not drawn, can only be called for fees and expenses and is therefore removed from the Total AUM calculation.

The table below provides the period to period rollforward of Total AUM.

(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-end funds, runoff of CLO collateral balances and the expiration of available capital. Outflows also reflect the sale of Metropolitan on April 1, 2021, which had $2.4 billion of Total AUM as of March 31, 2021.

(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Please refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for each of the periods presented.

Portfolio Appreciation (Depreciation). The overall portfolio appreciation of 41% in 2021 is comprised of 41% appreciation for carry funds within our Global Private Equity segment focusing on corporate private equity, 39% for funds focusing on real estate and 34% for fund focusing on natural resources, 22% appreciation for carry funds in the Global Credit

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segment and 48% appreciation for carry funds in the Global Investment Solutions segment. While the publicly traded investments in our Global Private Equity and Global Credit segments were flat in the fourth quarter, they experienced appreciation of 30% for the year.

While there is no perfectly comparable market index benchmark for the overall portfolio or any of its segments or strategies, we would note that S&P 500 and MSCI ACWI appreciation for the year were 27% and 17%, respectively, while the FTSE NAREIT Composite appreciation was 36%, the S&P Oil and Gas Exploration & Production Index was 81%, and S&P Leveraged Loan Index appreciation was 1%.

Consolidation of Certain Carlyle Funds

The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities. The entities we consolidate are referred to collectively as the Consolidated Funds in our consolidated financial statements. As of December 31, 2021, our Consolidated Funds represent approximately 3% of our AUM; 1% of our management fees; and less than 1% of our investment income or loss for the year ended December 31, 2021.

We are not required under the consolidation guidance to consolidate in our financial statements most of the investment funds we advise. However, we consolidate certain CLOs that we advise. As of December 31, 2021, our consolidated CLOs held approximately $6.7 billion of total assets and comprised substantially all of the assets and loans payable of the Consolidated Funds. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the liabilities of the Consolidated Funds are non-recourse to us.

Generally, the consolidation of the Consolidated Funds has a gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to the Company and equity. The majority of the net economic ownership interests of the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the consolidated financial statements. Because only a small portion of our funds are consolidated, the performance of the Consolidated Funds is not necessarily consistent with or representative of the combined performance trends of all of our funds.

For further information on our consolidation policy and the consolidation of certain funds, see Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K.

Consolidated Results of Operations

The following table and discussion sets forth information regarding our consolidated results of operations for the years ended December 31, 2021, 2020 and 2019. Our consolidated financial statements have been prepared on substantially the same basis for all historical periods presented; however, the consolidated funds are not the same entities in all periods shown due to changes in U.S. GAAP, changes in fund terms and the creation and termination of funds. As further described above, the consolidation of these funds primarily had the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment gains (losses) of Consolidated Funds in the year that the fund is initially consolidated. The consolidation of these funds had no effect on net income attributable to the Company for the periods presented.

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019.

Revenues

Total revenues increased $5.8 billion, or 199%, for the year ended December 31, 2021 as compared to 2020 and decreased $442.4 million, or 13%, for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the changes in total revenues for the years ended December 31, 2021 and 2020:

Fund Management Fees. Fund management fees increased $181.5 million, or 12%, for the year ended December 31, 2021 as compared to 2020, and increased $9.8 million, or 1%, for the year ended December 31, 2020 as compared to 2019, primarily due to the following:

Fund management fees include transaction and portfolio advisory fees, net of rebate offsets, of $90.7 million, $50.8 million, and $49.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Investment Income. Investment income increased $5.6 billion for the year ended December 31, 2021 as compared to 2020, and decreased $473.2 million for the year ended December 31, 2020 as compared to 2019, primarily due to the following:

(1) All other changes in 2021includes investment income of $49.8 million associated with the remeasurement of a corporate investment, which was previously carried at cost, resulting from an observable price change pursuant to ASC 321, Investments–Equity Securities.

Prior to the Control Transaction which closed on June 2, 2020, as described in Note 4 to the consolidated financial statements, we accounted for our investment in Fortitude under the equity method of accounting by recognizing our pro rata share of Fortitude’s U.S. GAAP earnings, which is included in principal investment income (loss) in the consolidated statements of operations. These amounts were inclusive of unrealized gains (losses) resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude’s U.S. GAAP financial statements. Modified coinsurance is subject to the general accounting principles for hedging, specifically the guidance originally issued as Derivatives Implementation Group Issue No. B36: Embedded Derivatives: Modified Coinsurance Agreements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (“DIG B36”). At the time we contributed our existing 19.9% interest in Fortitude to Carlyle FRL, a Carlyle-affiliated investment fund, we began accounting for our investment under the equity method based on our net asset value in the fund, which resulted in a loss in principal investment income (loss) of $620.7 million in the year ended December 31, 2020. As of December 31, 2021, our investment in Carlyle FRL was $715.7 million, relative to our cost of $465.5 million.

Our investment in NGP entitles us to 55% of the management fee-related revenue of the NGP entities that serve as advisors to the NGP Energy Funds and is subject to impairment under the U.S. GAAP accounting for equity method investments. We evaluate our equity method investment in NGP for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable, but no less than quarterly. For example, challenges with fundraising or lower future management fees could cause an impairment of our investment in NGP in the future. As of December 31, 2021, we continue to believe that our investment in NGP is not impaired.

We recorded an increase in investment income from CLOs during the year ended December 31, 2021 relative to the comparable period in 2020. The fair value of the CLO investments held by the firm (before the effects of consolidation) decreased 4% in 2021, with our investments in subordinated notes depreciating 3% and our investments in the senior notes depreciating 5% during 2021.

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Performance Allocations. Performance allocations increased $4.4 billion for the year ended December 31, 2021 compared to 2020 and increased $836.8 million for the year ended December 31, 2020 as compared to 2019. Performance allocations by segment for the years ended December 31, 2021, 2020 and 2019 comprised the following:

(1) The Company’s primary and secondary investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

Refer to “— Key Financial Measures” for a listing of the funds with performance allocations in excess of 10% of the total for the periods presented.

Despite the pandemic’s persistence, corporate earnings in 2021 exceeded expectations; investments in digitization and technology drove large productivity gains which more than offset input price inflation and powered margin expansion. Current estimates anticipate S&P 500 constituents’ 2021 full year earnings growth in excess of 45%. This robust performance, coupled with fiscal stimulus and ultra-low interest rates, buoyed global equity markets in aggregate in 2021. The Dow Jones, S&P 500, and Nasdaq 100 rose 18.7%, 26.9%, and 26.6% respectively in 2021. Globally, the MSCI ACWI, EuroStoxx 600 and Shanghai Composite rose 16.8%, 22.3%, and 4.8% respectively over the same period. Our carry fund portfolio exhibited similar momentum during 2021. Within our Global Private Equity segment, our corporate private equity funds appreciated 6% in the fourth quarter and 41% for the year and our real estate funds appreciated 11% during the fourth quarter and appreciated 39% for the year. Our natural resources funds appreciated 7% during the fourth quarter and appreciated 34% for the year. Global Credit carry funds, which represent approximately 18% of the total Global Credit remaining fair value, were up 1% in the fourth quarter and up 22% for the year. Global Investment Solutions appreciation was 7% in the fourth quarter and 48% for the year, though the valuations of our primary and secondary funds of funds generally reflect investment values on a one-quarter lag.

Interest and Other Income. Interest and other income increased $1.1 million for the year ended December 31, 2021 as compared to 2020 and decreased $7.7 million for the year ended December 31, 2020 as compared to 2019. The increase for the year ended December 31, 2021 was primarily as a result of an increase in the reimbursement of certain costs incurred on behalf of Carlyle funds. The decrease in 2020 was primarily as a result of decreases in the reimbursement of certain costs incurred on behalf of Carlyle funds and decreases in interest income from investments in CLO subordinated notes and interest income related to corporate treasury investments that matured in 2019.

Interest and Other Income of Consolidated Funds.  Our CLOs generate interest income primarily from investments in bonds and loans inclusive of amortization of discounts and generate other income from consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.

Interest and other income of consolidated funds increased $26.4 million for the year ended December 31, 2021 as compared to 2020, and increased $27.6 million for the year ended December 31, 2020 as compared to 2019. Substantially all of the variance in interest and other income of Consolidated Funds for both periods relates to interest income from CLOs.

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Expenses

Total expenses increased $2.4 billion for the year ended December 31, 2021 as compared to 2020, and increased $213.6 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the changes in total expenses for the year ended December 31, 2021 and 2020:

Total Compensation and Benefits. Total compensation and benefits increased $2.3 billion for the year ended December 31, 2021 as compared to 2020, and increased $323.6 million for the year ended December 31, 2020 as compared to 2019, due to the following:

Cash-based compensation and benefits. Cash-based compensation and benefits increased $58.4 million, or 7%, for the year ended December 31, 2021 as compared to 2020, and increased $16.2 million, or 2%, for the year ended December 31, 2020 as compared to 2019, primarily due to the following:

(1) The Carlyle Aviation Partners acquisition included an earn-out of up to $150.0 million, under which we have paid $47.9 million through December 31, 2021. For additional information, refer to “—Liquidity and Capital Resources—Contingent Cash Payments For Business Acquisitions and Strategic Investments.”

Equity-based compensation. Equity-based compensation, net of forfeitures, increased $58.1 million, or 55%, for the year ended December 31, 2021 as compared to 2020. The increase in equity-based compensation from 2020 to 2021 was primarily due to the expanded use of equity-based compensation incentive programs as well as a forfeiture credit recorded in 2020 related to the retirement of one of our co-chief executive officers. During the year ended December 31, 2021, we granted 7.1 million long-term strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, with a larger proportion of the awards vesting based

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on the 2024 performance year. As a result, the number of restricted stock units granted in 2021 is higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years.

The decrease in equity-based compensation from 2019 to 2020 was due primarily to the lower rate of ongoing grants of restricted stock units, as well as a forfeiture credit recorded in 2020 related to the retirement of one of our co-chief executive officers.

Performance allocations and incentive fee related compensation expense. Performance allocations and incentive fee related compensation expense increased $2.2 billion for the year ended December 31, 2021 as compared to 2020 and increased $342.4 million for the year ended December 31, 2020 as compared to 2019. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fee was 48%, 47%, and 52% for the years ended December 31, 2021, 2020 and 2019, respectively. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fees fluctuates depending on the mix of funds contributing to performance allocations and incentive fees in a given period. For our largest segment, Global Private Equity, our performance allocations and incentive fee related compensation expense as a percentage of performance allocations and incentive fees is generally around 45%. Performance allocations from our Global Investment Solutions segment pay a higher ratio of performance allocations and incentive fees as compensation, primarily as a result of the terms of our acquisition of AlpInvest. Conversely, performance allocations from the Legacy Energy funds in our Global Private Equity segment are primarily allocated to Carlyle because the investment teams for the Legacy Energy funds are employed by Riverstone not Carlyle.

General, Administrative and Other Expenses. General, administrative and other expenses increased $82.4 million for the year ended December 31, 2021 as compared to 2020, and decreased $145.1 million for the year ended December 31, 2020 as compared to 2019, primarily due to:

(1)     In connection with the April 1, 2021 sale of MRE, we entered into a sublease of certain office space in New York which resulted in a $26.8 million right-of-use asset impairment charge.

(2)    General, administrative and other expenses in 2020 included the positive impact of a $29.9 million recovery of litigation costs. See Note 8 to the consolidated financial statements in Item 8 of this Form 10-K.

(3)    Foreign exchange adjustments for the year ended December 31, 2021 include a loss of $14.7 million from the sale of our local Brazilian management entity related to amounts previously recorded in accumulated other comprehensive income. Foreign exchange adjustments for the years ended December 31, 2021 and 2020 are also driven by the revaluation on our European CLO investments.

Interest. Interest increased $19.3 million for the year ended December 31, 2021 as compared to 2020 primarily due to interest accrued on the Subordinated Notes issued in May 2021, as well as $10.1 million of interest expense recorded upon the early extinguishment of the 3.875% Senior Notes in November 2021. Interest increased $11.9 million for the year ended December 31, 2020 as compared to 2019 primarily due to interest accrued on the 3.500% Senior Notes issued in September 2019. See Note 6 to the consolidated financial statements in Item 8 of this Form 10-K for more information.

Interest and Other Expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $15.0 million for the year ended December 31, 2021 as compared to 2020 primarily due to higher interest expense on the

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consolidated CLOs. Interest and other expenses of Consolidated Funds increased $31.7 million for the year ended December 31, 2020 as compared to 2019, primarily due to higher interest expense on the consolidated CLOs.

The CLOs incur interest expense on their loans payable and incur other expenses consisting of trustee fees, rating agency fees and professional fees. Substantially all interest and other income of our CLOs together with interest expense of our CLOs and net investment gains of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.

Other Non-operating Expenses (Income).  For the year ended December 31, 2021, this caption includes a loss on the sale of our local Brazilian management entity and related transaction costs of $4.7 million and a $5.0 million gain on the sale of our interest in MRE. For the year ended December 31, 2020, this caption includes the impact of the Conversion on our tax receivable agreement liability, which was reduced by $9.3 million. See Note 10 to the consolidated financial statements for more information on the tax impacts of the Conversion.

Net Investment Gains (Losses) of Consolidated Funds

For the years ended December 31, 2021, 2020 and 2019 net investment (losses) gains of Consolidated Funds was $2.5 million, $(21.3) million, and $(23.9) million, respectively, comprised of the activity of the consolidated CLOs and certain other funds. For the consolidated CLOs, the amount reflects the net gain or loss on the fair value adjustment of both the assets and liabilities. The components of net investment gains of consolidated funds for the respective periods are:

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes was $982.3 million, $197.2 million and $49.0 million for the years ended December 31, 2021, 2020 and 2019, respectively, with effective tax rates of 24.4%, 34.0% and 4.0%, respectively. The effective tax rate for the years ended December 31, 2021 and 2020 is primarily comprised of the 21% U.S. federal corporate income tax rate plus U.S. state and foreign corporate income taxes, partially offset by non-controlling interests and the impact of a tax benefit resulting from the vesting of restricted stock units. The effective tax rate for the year ended December 31, 2020 also differs from the statutory rate due to the income tax expense resulting from the Conversion (see Note 10 to the accompanying consolidated financial statements for more information regarding the impact of the Conversion). Excluding this impact from Conversion, our effective income tax rate would have been approximately 19% for the year ended December 31, 2020. The effective tax rate for the year ended December 31, 2019 reflects our pre-Conversion status as a partnership.

As of December 31, 2021 and 2020, the Company had federal, state, local and foreign taxes payable of $93.3 million and $35.1 million, respectively, which is recorded as a component of accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance sheet.

Net Income Attributable to Non-controlling Interests in Consolidated Entities

Net income attributable to non-controlling interests in consolidated entities was $70.5 million, $34.6 million, and $36.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts are primarily attributable to the net earnings of the Consolidated Funds for each period, which are substantially all allocated to the related funds’ limited partners or CLO investors. The net income (loss) of our Consolidated Funds, after eliminations, was $2.7 million, $8.1 million, and $10.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Net income attributable to non-controlling interests in consolidated entities also includes net income attributable to non-controlling interests in carried interest, giveback obligations, and cash held for carried interest distributions.

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Net Income (Loss) Attributable to The Carlyle Group Inc. Common Stockholders

The net income attributable to The Carlyle Group Inc. common stockholders was $3.0 billion, $348.2 million, and $345.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Prior to the Conversion, the Company was allocated a portion of the monthly net income (loss) attributable to Carlyle Holdings based on the Company’s ownership in Carlyle Holdings (which was approximately 34% as of December 31, 2019). In addition, net income attributable to The Carlyle Group L.P. common unitholders for the year ended December 31, 2019 was reduced by the Series A preferred units (“Preferred Units”) redemption premium.

Non-GAAP Financial Measures

The following tables set forth information in the format used by management when making resource deployment decisions and in assessing performance of our segments. These non-GAAP financial measures are presented for the years ended December 31, 2021, 2020 and 2019. Our Non-GAAP financial measures exclude the effects of unrealized performance allocations net of related compensation expense, unrealized principal investment income, consolidated funds, acquisition-and disposition-related items including amortization and any impairment charges of lease right-of-use assets or acquired intangible assets and contingent consideration taking the form of earn-outs, charges associated with equity-based compensation, changes in the tax receivable agreement liability, corporate actions and infrequently occurring or unusual events.

The following table shows our total segment Distributable Earnings, or “DE”, and Fee Related Earnings, or “FRE”, for the years ended December 31, 2021, 2020 and 2019.

The following table sets forth our total segment revenues for the years ended December 31, 2021, 2020 and 2019.

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The following table sets forth our total segment expenses for the years ended December 31, 2021, 2020 and 2019.

Income before provision for income taxes is the U.S. GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings. The following table is a reconciliation of income before provision for income taxes to Distributable Earnings and to Fee Related Earnings.

(1)    Adjustments to unrealized principal investment income (loss) during the year ended December 31, 2020 are inclusive of $211.8 million of unrealized gains resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude’s U.S. GAAP financial statements prior to the contribution of our investment in Fortitude to Carlyle FRL on June 2, 2020. At the time of the contribution of our investment to Carlyle FRL, we began accounting for our investment under the equity method based on our net asset value in the fund, which is an investment company that accounts for its investment in Fortitude at fair value. This resulted in an unrealized loss in principal investment income (loss) of $620.7 million during the year ended December 31, 2020. Adjustments to unrealized principal investment income (loss) during the year ended December 31, 2019 are inclusive of $582.0 million of unrealized gains on embedded derivatives.

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(2)    Adjusted unrealized principal investment income (loss) from the investment in Fortitude represents 19.9% of Fortitude’s estimated net income (loss), excluding the unrealized gains (losses) related to embedded derivatives, prior to the contribution of our investment in Fortitude to Carlyle FRL on June 2, 2020.

(3)    Equity-based compensation for the years ended December 31, 2021, 2020 and 2019 includes amounts presented in principal investment income and general, administrative and other expenses in our U.S. GAAP statement of operations.

(4)     See reconciliation to most directly comparable U.S. GAAP measure below:

(5)    Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of related compensation expense and unrealized principal investment income, which are excluded from our Non-GAAP results, (ii) amounts earned from the Consolidated Funds, which are eliminated in the U.S. GAAP consolidation but are included in the Non-GAAP results, (iii) amounts attributable to non-controlling interests in consolidated entities, which are excluded from the Non-GAAP results, (iv) the reclassification of NGP performance revenues, which are included in investment income in the U.S. GAAP financial statements, (v) the reclassification of certain incentive fees from business development companies, which are included in fund management fees in the Non-GAAP results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues. Adjustments to principal investment income (loss) also include the reclassification of earnings for the investment in NGP Management and its affiliates to the appropriate operating captions for the Non-GAAP results, and the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the Non-GAAP results (see Note 4 to the consolidated financial statements).

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Distributable Earnings for our reportable segments is as follows:

Segment Analysis

Discussed below is our DE and FRE for our segments for the periods presented. Our segment information is reflected in the manner used by our senior management to make operating and compensation decisions, assess performance and allocate resources.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated Funds. As a result, segment revenues from management fees, realized performance revenues and realized principal investment income (loss) are different than those presented on a consolidated U.S. GAAP basis because these revenues recognized in certain segments are received from Consolidated Funds and are eliminated in consolidation when presented on a consolidated U.S. GAAP basis. Furthermore, segment expenses are different than related amounts presented on a consolidated U.S. GAAP basis due to the exclusion of fund expenses that are paid by the Consolidated Funds.

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Global Private Equity

For purposes of presenting our results of operations for this segment, our earnings from our investments in NGP are presented in the respective operating captions. The following table presents our results of operations for our Global Private Equity(1) segment:

(1) On August 31, 2021, we sold 100% of our interest in our local Brazilian management entity and entered into a sub-advisory agreement with the acquiring company, which will provide advisory services with respect to Carlyle’s Brazilian portfolio. The loss on the sale and related transaction costs of $4.7 million and foreign currency translation loss of $14.7 million are not included in DE or FRE. See “Non-GAAP Financial Measures” for the reconciliation of Total DE and FRE to the U.S. GAAP financial statements.

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Distributable Earnings

Distributable earnings increased $1.4 billion for the year ended December 31, 2021 as compared to 2020, and increased $25.1 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the changes in distributable earnings for the years ended December 31, 2021 and 2020:

Realized Net Performance Revenues. Realized net performance revenues increased $1.3 billion for the year ended December 31, 2021 as compared to 2020, and increased $64.9 million for the year ended December 31, 2020 as compared to 2019. Realized net performance revenues increased in 2021 primarily driven by realization activity in our U.S., Europe and Asia buyout funds, as well as our U.S. real estate funds. During the year ended December 31, 2021 we realized performance revenues for the first time on our eighth U.S. real estate fund, our fourth Asia buyout fund, and our third Japan buyout fund.

Realized net performance revenues for the year ended December 31, 2020 increased compared to 2019 as we began realizing carry from CP VI during the year, and we generated higher performance revenue realizations from our financial services and Europe real estate funds. Realized net performance revenues in 2019 were also impacted by the realized clawback on one of the Legacy Energy funds.

Realized net performance revenues were primarily generated by the following funds for the years ended December 31, 2021, 2020 and 2019, respectively:

Realized Principal Investment Income. Realized principal investment income increased $115.8 million for the year ended December 31, 2021 as compared to 2020 and decreased $21.3 million for the year ended December 31, 2020 as

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compared to 2019. The increase in realized principal investment income for the year ended December 31, 2021 as compared to 2020 was primarily driven by increases in realized principal investment income from our U.S. buyout and U.S. real estate funds, as well as our Europe buyout and U.S. growth funds.

The decrease in realized principal investment income for the year ended December 31, 2020 as compared to 2019 was primarily due to the recovery of $71.5 million from the final resolution of French tax litigation concerning a European real estate fund in 2019 (see Note 8 of our consolidated financial statements for more information on this matter), partially offset by higher realized gains in 2020 from our U.S., Asia and Europe buyout funds.

Fee Related Earnings

Fee related earnings increased $19.3 million for the year ended December 31, 2021 as compared to 2020, and decreased $4.6 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

Fee Revenues. Total fee revenues increased $81.3 million for the year ended December 31, 2021 as compared to 2020 and decreased $80.7 million for the year ended December 31, 2020 as compared to 2019, due to the following:

The increase in fund management fees for the year ended December 31, 2021 as compared to 2020 was primarily due to activation of management fees on CP VIII, CRP IX, CAP Growth II and CP Growth during the year, as well as higher management fees from CJP IV, CPI, and our Renewables fund (CRSEF) which included $3.2 million in catch-up management fees. These increases were partially offset by basis step-downs in CJP III and CEOF II, as well as lower management fees on CP VI and CEP IV, on which management fees are based on invested capital and which have had realizations over the last twelve months. CIEP II also had a decrease in management fees, driven by catch-up management fees of $6.6 million in 2020.

The decrease in fund management fees for the year ended December 31, 2020 as compared to 2019 was primarily due to lower management fees from CGIOF, including $20.4 million in catch-up management fees for subsequent closes in 2019, and lower management fees from NGP X, NGP XI and NGP XII. These decreases were partially offset by higher management fees from CIEP II, including catch-up management fees of $6.6 million in 2020, activation of management fees in 2020 from CJP IV, and higher management fees from CETP IV.

The weighted average management fee rate slightly increased to 1.26% at December 31, 2021 from 1.25% at December 31, 2020. Fee-earning AUM was $104.3 billion and $91.6 billion as of December 31, 2021 and 2020, respectively, reflecting an increase of $12.7 billion.

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The weighted average management fee rate decreased slightly from 1.26% at December 31, 2019 to 1.25% at December 31, 2020. Fee-earning AUM was $91.6 billion and $94.8 billion as of December 31, 2020 and 2019, respectively, reflecting a decrease of $3.2 billion.

Portfolio advisory and transaction fees increased for the year ended December 31, 2021 as compared to 2020 and resulted primarily from transaction fees related to investments in our Japan buyout, Europe buyout and Global Partners funds. Portfolio advisory and transaction fees decreased for the year ended December 31, 2020 as compared to 2019 and resulted primarily from transaction fees related to investments in our financial services and international energy funds.

Cash-based compensation and benefits expense. Cash-based compensation and benefits expense increased $44.3 million, or 9%, for the year ended December 31, 2021 as compared to 2020, primarily due to higher year-end bonuses. Cash-based compensation and benefits expense decreased $8.7 million for the year ended December 31, 2020 as compared to 2019, primarily due to lower cash bonuses as a result of decreased headcount.

General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased $5.7 million, excluding the impact of litigation cost recoveries in 2020, for the year ended December 31, 2021 as compared to 2020, primarily due to lower professional fees.

General, administrative and other indirect expenses decreased $57.3 million for the year ended December 31, 2020 as compared to 2019 primarily due to the allocated portion of the cost recovery associated with the CCC matter of $20.3 million (see Note 8 to the consolidated financial statements for more information), lower professional fees and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

Fee-earning AUM is presented below for each period together with the components of change during each respective period.

The table below breaks out Fee-earning AUM by its respective components at each period.

(1)For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”

(2)Represents the aggregate effective management fee rate of each fund in the segment, weighted by each fund’s Fee-earning AUM, as of the end of each period presented.

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The table below provides the period to period rollforward of Fee-earning AUM.

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, and gross subscriptions in open-ended vehicles with management fees based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, and gross redemptions in open-ended vehicles with management fees based on net asset value. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Fee-earning AUM was $104.3 billion at December 31, 2021, an increase of $12.7 billion, or 14%, compared to $91.6 billion at December 31, 2020. This was driven by inflows of $24.6 billion primarily related to the activation of management fees in CP VIII, CRP IX, and CP Growth, as well as capital invested in CPI. Partially offsetting the increase were outflows of $10.9 billion from the step-down of management fees in CP VII and CRP VIII and distributions in other funds outside of their investment period. Negative foreign exchange activity of $1.3 billion resulted from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD. Investment and distribution activity by funds still in the investment period does not impact Fee-earning AUM as these funds are based on commitments.

Fee-earning AUM was $91.6 billion at December 31, 2020, a decrease of $3.2 billion, or 3%, compared to $94.8 billion at December 31, 2019. This was driven by outflows of $9.5 billion which were principally a result of dispositions in our U.S. Buyout, NGP Energy, and Legacy Energy funds, as well as distributions in other funds outside of their investment period. This was offset by inflows of $5.4 billion primarily related to the activation of management fees in CJP IV, subscriptions in CPI, and new fee-paying commitments raised in various other funds. Also offsetting the decrease was positive foreign exchange activity of $1.2 billion from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

Fee-earning AUM was $94.8 billion at December 31, 2019, a decrease of $0.5 billion, or 1%, compared to $95.3 billion at December 31, 2018. This was driven by outflows of $8.6 billion which were principally a result of dispositions in our U.S. buyout, U.S. real estate, NGP Energy, and Europe buyout funds, as well as distributions in other funds outside of their investment period. This was offset by inflows of $8.3 billion primarily related to the activation of management fees in CIEP II and CETP IV, as well as new fee-paying commitments raised in various other funds.

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Total AUM as of and for each of the Three Years in the Period Ended December 31, 2021

The table below provides the period to period rollforward of Total AUM.

(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-ended funds, and the expiration of available capital.

(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, and other changes in AUM.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Total AUM was $162.1 billion at December 31, 2021, an increase of $30.3 billion, or 23%, compared to $131.8 billion at December 31, 2020. This increase was driven by $27.2 billion of inflows primarily due to fundraising in CP VIII, CRP IX, CPI, and CP Growth, as well as market appreciation of $32.7 billion. The carry funds driving appreciation for the period included $7.3 billion attributable to CP VI, $3.7 billion attributable to CP VII, $1.9 billion attributable to CEP IV, and $1.7 billion attributable to CRP VIII. The increase was partially offset by $27.8 billion of outflows primarily from distributions and the expiration of dry powder in our U.S. buyout, U.S. real estate, and Europe buyout funds, and $(1.8) billion in foreign exchange activity primarily from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

Total AUM was $131.8 billion at December 31, 2020, an increase of $2.0 billion, or 2%, compared to $129.8 billion at December 31, 2019. This increase was driven by $3.6 billion of inflows primarily due to fundraising in CPI, CIEP II, and CJP IV. Also contributing to this increase was market appreciation of $6.4 billion. The carry funds driving appreciation for the period included $6.1 billion attributable to CP VI, $1.3 billion attributable to CAP IV, and $0.8 billion attributable to CP VII, offset by $(1.0) billion attributable to NGP XI and $(0.5) billion attributable to CIEP I. The increase of $1.6 billion in foreign exchange activity was primarily from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD. Partially offsetting the increase were $9.6 billion of outflows driven primarily by distributions in our U.S. buyout, Asia buyout and U.S. real estate funds.

Total AUM was $129.8 billion at December 31, 2019, an increase of $3.4 billion, or 3%, compared to $126.4 billion at December 31, 2018. This increase was driven by $10.7 billion of inflows primarily due to fundraising in CJP IV, CGP II, CETP IV, and CIEP II. Also contributing to this increase was market appreciation and other activity of $2.9 billion due to appreciation in our carry funds partially offset by the impact of management fees and expenses. The carry funds driving appreciation for the period included $0.9 billion attributable to CP VI, $0.5 billion attributable to CP VII, and $0.4 billion attributable to CAP V. Partially offsetting the increase were $9.9 billion of outflows driven primarily by distributions in our U.S. real estate, NGP Energy, and U.S. buyout funds.

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Fund Performance Metrics

Fund performance information for our investment funds that generally have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of December 31, 2021, which we refer to as our “significant funds,” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See “Item 1A. Risk Factors — Risks Related to Our Business Operations — The historical returns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.”

The following tables reflect the performance of our significant funds in our Global Private Equity business. See Part I. Item 1. “Business — Our Family of Funds” for a legend of the fund acronyms listed below.

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(1)    Represents the original cost of investments since inception of the fund.

(2)    Represents all realized proceeds since inception of the fund.

(3)    Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.

(4)    Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

(5)    An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, represents at least 85% of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures.

(6)    Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(7)    Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for

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multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(8)    Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end.

(9)    Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.

(10)    Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: CVP II, MENA, CCI, CSSAF I, CPF, CAP Growth I, CAP Growth II and CBPF II.

(11)    Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CP I, CP II, CP III, CP IV, CEP I, CAP I, CAP II, CBPF I, CJP I, CJP II, CMG, CVP I, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III and Mexico.

(12)    For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end.

(13)    For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.

(14)    Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: CCR, CER I and CER II.

(15)    Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CRP I, CRP II, CRP III, CRCP I, CAREP I, CAREP II, CEREP I, and CEREP II.

(16)    Aggregate includes the following Legacy Energy funds and related co-investments: Energy I, Energy II, Energy III, Energy IV, Renew I, and Renew II.

(17)    Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: NGP GAP, CPOCP, CRSEF, and NGP Minerals.

(18)    Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CIP.

(19)    The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds on which the fee basis stepdown has not yet occurred. Funds without a listed Fee Initiation Date and Stepdown Date have not yet initiated fees.

(20)    All amounts shown represent total capital commitments as of December 31, 2021. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change.

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Global Credit

The following table presents our results of operations for our Global Credit segment:

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Distributable Earnings

Distributable earnings increased $3.5 million for the year ended December 31, 2021 as compared to 2020, and increased $67.8 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the changes in distributable earnings for the years ended December 31, 2021 and 2020:

Realized Net Performance Revenues. Realized net performance revenues decreased $17.6 million for the year ended December 31, 2021 as compared to 2020 primarily due to realization of a $6.5 million net giveback obligation for CSP III in 2021 and performance revenue realizations generated from Carlyle Aviation Partners for the year ended December 31, 2020. Realized net performance revenues increased $12.9 million for the year ended December 31, 2020 as compared to 2019 primarily driven by Carlyle Aviation Partners in 2020.

Realized Principal Investment Income. Realized principal investment income increased $13.2 million for the year ended December 31, 2021 as compared to 2020 and increased $6.7 million for the year ended December 31, 2020 as compared to 2019. The increase in realized principal investment income for the year ended December 31, 2021 as compared to 2020 was primarily due to higher gains on investments in our U.S. CLOs and distressed credit carry funds. The increase in realized principal investment income for the year ended December 31, 2020 as compared to 2019 was primarily due to realized losses in one of our energy mezzanine funds in 2019 and higher realized gains on investments in our business development companies.

Fee Related Earnings

Fee related earnings increased $12.2 million for the year ended December 31, 2021 as compared to 2020, and increased $51.6 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

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Fee Revenues. Total fee revenues increased $61.6 million for the year ended December 31, 2021 as compared to 2020 and increased $36.4 million for the year ended December 31, 2020 as compared to 2019, due to the following:

The increase in fund management fees for the year ended December 31, 2021 as compared to 2020 was primarily driven by increased management fees from CCOF I, which earns fees based on AUM, CCOF II, which activated management fees in October 2020, record CLO origination activity, our Interval Fund and the activation of fees on newly-raised SMAs. These increases were partially offset by lower management fees from CSP IV due to the step-down of the fee rate and basis in January 2021.

The increase in fund management fees for the year ended December 31, 2020 as compared to 2019 was primarily driven by increased management fees from our CLOs, opportunistic credit carry fund, direct lending platform, Carlyle FRL and Carlyle Aviation Partners, partially offset by lower management fees from our energy mezzanine carry funds.

The weighted average management fee rate on our carry funds slightly decreased from 1.22% at December 31, 2020 to 1.21% at December 31, 2021. The weighted average management fee rate on our carry funds increased from 1.20% at December 31, 2019 to 1.22% at December 31, 2020 primarily due to fundraising in Carlyle Aviation Partners.

The increase in portfolio advisory and transaction fees, net, and other fees for the years ended December 31, 2021 and 2020 to their comparable prior periods resulted primarily from increased underwriting fees related to Carlyle Global Capital Markets. Portfolio advisory and transaction fees, net, and other fees for the year ended December 31, 2020 also reflects transaction fees associated with Carlyle FRL.

Cash-based compensation and benefits expense. The increase in cash-based compensation and benefits expense for the years ended December 31, 2021 and 2020 relative to their comparable periods was primarily due to increased headcount and higher cash bonuses as we continue to invest in the growth of our platform and launch new strategies.

General, administrative and other indirect expenses. General, administrative and other indirect expenses increased $11.1 million for the year ended December 31, 2021 as compared to 2020, excluding the impact of litigation cost recoveries in 2020, primarily due to increases in professional fees, rent, other general expenses. General, administrative and other indirect expenses for the year ended December 31, 2020 also reflects expense recoveries from Carlyle FRL.

General, administrative and other indirect expenses decreased $33.2 million for the year ended December 31, 2020 as compared to 2019 primarily due to the allocated portion of the cost recovery associated with the CCC matter of $6.3 million (see Note 8 to the consolidated financial statements for more information), as well as lower professional fees, due in part to expense recoveries from Carlyle FRL, and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

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Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

Fee-earning AUM is presented below for each period together with the components of change during each respective period.

The table below breaks out Fee-earning AUM by its respective components at each period.

(1)For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”

(2)Includes funds with fees based on gross asset value.

(3)Represents the aggregate effective management fee rate for carry funds, weighted by each fund’s Fee-earning AUM, as of the end of each period presented. Management fees for CLOs are based on the total par amount of the assets (collateral) and principal balance of the notes in the fund and are not calculated as a percentage of equity and are therefore not included.

The table below provides the period to period rollforward of Fee-earning AUM.

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and runoff of CLO collateral balances. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in funds or vehicles based on the lower of cost or fair value or net asset value, as well as activity of funds with fees based on gross asset value.

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(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Fee-earning AUM was $51.7 billion at December 31, 2021, an increase of $9.6 billion, or 23%, compared to $42.1 billion at December 31, 2020. Driving the increase were inflows of $13.0 billion primarily attributable to new fee-paying capital raised in our U.S. and Europe CLOs and investment activity in our opportunistic credit funds, as well as $1.5 billion of market and other activity. Partially offsetting the increase were $4.3 billion of outflows primarily related to run-off of our CLO collateral balances and dispositions from funds which charge fees on invested capital. Distributions from carry funds still in the investment period do not impact Fee-earning AUM as these funds are based on commitments and not invested capital.

Fee-earning AUM was $42.1 billion at December 31, 2020, an increase of $4.2 billion, or 11%, compared to $37.9 billion at December 31, 2019. Driving the increase were inflows of $6.4 billion primarily attributable to new fee-paying capital raised in our U.S. and Europe CLOs, fee-paying third-party capital raised in our insurance business, and investment activity in CCOF I, as well as $1.2 billion in foreign exchange activity related to the translation of our EUR-denominated CLOs to USD. Partially offsetting the increase were $3.9 billion of outflows primarily related to a fee basis step-down in CEMOF II and run-off of our CLO collateral balances.

Fee-earning AUM was $37.9 billion at December 31, 2019, an increase of $2.7 billion, or 8%, compared to $35.2 billion at December 31, 2018. Driving the increase were inflows of $4.4 billion primarily attributable to new fee-paying capital raised in our U.S. and Europe CLO’s and follow-on closes in CCOF I, as well as $1.1 billion of market and other activity primarily related to increases in gross asset value in our BDCs and securitization vehicles. Partially offsetting the increase were $2.7 billion of outflows primarily related to a fee basis step-down in CEMOF II and run-off of our CLO collateral balances.

Total AUM as of and for each of the Three Years in the Period Ended December 31, 2021

The table below provides the period to period rollforward of Total AUM.

(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-end funds, runoff of CLO collateral balances, and the expiration of available capital.

(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Total AUM was $73.4 billion at December 31, 2021, an increase of $17.5 billion, or 31%, compared to $55.9 billion at December 31, 2020. This was driven by $16.9 billion of inflows primarily due to new U.S. and Europe CLO issuances, as well as fundraising in CCOF II and various platform accounts. Also driving the increase was $5.4 billion of market and other activity

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attributable to 22% appreciation in our carry funds and increases in the gross asset value of our BDCs and securitization vehicles. Partially offsetting the increase were outflows of $4.2 billion primarily related to run-off of our CLO collateral balances and distributions in our Distressed Credit and Energy Credit funds.

Total AUM was $55.9 billion at December 31, 2020, an increase of $6.5 billion, or 13%, compared to $49.4 billion at December 31, 2019. This was driven by $9.5 billion of inflows primarily due to new U.S. and Europe CLO issuances, fundraising in CCOF II, and closings in various platform accounts. Also driving the increase was $0.7 billion in foreign exchange activity related to the translation of our EUR-denominated CLOs to USD. Partially offsetting the increase were outflows of $4.2 billion primarily related to distributions in our Energy Credit and Aviation funds, as well as CLO run-off.

Total AUM was $49.4 billion at December 31, 2019, an increase of $5.0 billion, or 11%, compared to $44.4 billion at December 31, 2018. This was driven by $6.3 billion of inflows primarily due to new U.S. and Europe CLO issuances, as well as additional closes in CCOF I. Also driving the increase was market and other activity of $1.2 billion, the majority of which was attributable to increases in the gross asset value of our BDC’s and securitization vehicles. Partially offsetting the increase were outflows of $2.4 billion primarily related to distributions in our Energy Credit and Aviation funds, as well as CLO run-off.

Fund Performance Metrics

Fund performance information for certain of our Global Credit Funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See Part I. Item 1A. “Risk Factors—Risks Related to Our Business Operations—The historical returns attributable to our funds including those presented in this report should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.”

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The following table reflects the performance of certain funds in our Global Credit business. These tables separately present funds that, as of the periods presented, had at least $1.0 billion in capital commitments, cumulative equity invested or total equity value. See Part I. Item 1. “Business — Our Family of Funds” for a legend of the fund acronyms listed below.

(1)    Represents the original cost of investments since the inception of the fund. For CSP II and CSP III, reflects amounts net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC.

(2)    Represents all realized proceeds since inception of the fund.

(3)    Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.

(4)    Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

(5)    Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(6)    Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(7)    Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end.

(8)    For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end.

(9)    Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: SASOF IV, SASOF V, CALF and CICF.

(10)    Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CSP I, CMP I, CMP II, SASOF II and CASCOF.

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(11)    The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds on which the fee basis stepdown has not yet occurred. Funds without a listed Fee Initiation Date and Stepdown Date have not yet initiated fees.

(12)    All amounts shown represent total capital commitments as of December 31, 2021. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change.

Global Investment Solutions

The following table presents our results of operations for our Global Investment Solutions(1) segment:

(1) On April 1, 2021, we closed on the sale of our interest in Metropolitan Real Estate (“MRE”). Distributable Earnings and Fee Related Earnings attributable to MRE in periods prior to the sale were immaterial to the Global Investment Solutions segment. The $5.0 million gain on the sale and the $26.8 million right-of-use asset impairment, as a result of the sublease transaction (see Note 8 to the consolidated financial statements in Item 8 of this Form 10-K), are not included in DE or FRE. See “Non-GAAP Financial Measures” for the reconciliation of Total DE and FRE to the U.S. GAAP financial statements.

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Distributable Earnings

Distributable earnings increased $60.7 million for the year ended December 31, 2021 as compared to 2020, and increased $22.6 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the change in distributable earnings for the years ended December 31, 2021 and 2020:

Realized Net Performance Revenues. Realized net performance revenues increased $8.2 million for the year ended December 31, 2021 as compared to 2020, and increased $4.4 million for the year ended December 31, 2020 as compared to 2019. Substantially all of the realized net performance revenues were generated from AlpInvest secondary and co-investment carry fund vehicles for the years ended December 31, 2021, 2020 and 2019. Performance revenues from our Global Investment Solutions segment pay a higher ratio of performance revenues as compensation, primarily as a result of the terms of our acquisition of AlpInvest. Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any carried interest with respect to the historical investments and commitments to our AlpInvest fund vehicles that existed as of July 1, 2011 (including any options to increase any such commitments exercised after such date). We are entitled to 15% of the carried interest with respect to commitments from the historical owners of AlpInvest for the period between 2011 and 2020, except in certain instances, and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties). As funds that have launched since our acquisition of AlpInvest in 2011 begin to realize performance revenues, which will not occur until all capital contributions for investments and expenses and the preferred return hurdle have been returned, an increasing share of net realized performance revenues will be for our benefit.

Fee Related Earnings

Fee related earnings increased $46.9 million for the year ended December 31, 2021 as compared to 2020, and increased $19.9 million for the year ended December 31, 2020 as compared to 2019. The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

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Fee Revenues. Total fee revenues increased $35.8 million for the year ended December 31, 2021 as compared to 2020, primarily due to increased management fees driven by the activation of management fees on our latest secondaries fund in the second quarter of 2020 and our latest coinvestment fund in the second quarter of 2021, as well as $4.4 million in catch-up fees. These increases were partially offset by the impact of the sale of MRE on April 1, 2021, which resulted in a $15.9 million decrease in management fees.

Total fee revenues increased $36.0 million for the year ended December 31, 2020 as compared to 2019, primarily due to increased management fees from our private equity fund vehicles driven by the activation of management fees on our latest secondaries fund and higher catch-up management fees on MRE real estate fund-of-fund vehicles.

Cash-based compensation and benefits expense. Cash-based compensation and benefits expense decreased $5.3 million for the year ended December 31, 2021 as compared to 2020, primarily as a result of the MRE sale on April 1, 2021, partially offset by an increase in cash bonuses.

Cash-based compensation and benefits expense increased $17.2 million for the year ended December 31, 2020 as compared to 2019, primarily due to an increase in 2020 cash bonuses.

General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased $9.1 million for the year ended December 31, 2021 as compared to 2020, excluding the impact of litigation cost recoveries in 2020, primarily due to the sale of MRE.

General, administrative and other indirect expenses increased $0.6 million for the year ended December 31, 2020 as compared to 2019, primarily due to increased professional fees, partially offset by the allocated portion of the cost recovery associated with the CCC matter of $3.3 million (see Note 8 to the consolidated financial statements for more information) and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

Fee-earning AUM is presented below for each period together with the components of change during each respective period.

The table below breaks out Fee-earning AUM by its respective components during the period.