Originally Posted by Villages Kahuna

Private equity firms are organized as entities that solicit investment funds from investors like pension funds, college endowments, etc. The role they play is to invest those funds by buying companies which they actively manage to increase their value, then a few years later they sell the companies or take them public through an IPO, creating a superior return on investment for the participants in their investment fund. The private equity firm, in this case Bain, takes fees for all the work they do in finding companies to buy as well as fees for their ongoing service in managing the companies while they own them. When the companies they buy are sold, Bain takes a "preferred return" (typically 20% of the capital gain), then the rest of the gains are distributed pro rata among the firms who invested in their investment fund.

Almost always the individual investments, the "deal" where Bain would buy a company, are organized as partnerships. The key Bain people involved in finding the investment and subsequently managing it, along with the key managers of the company being purchased, are given allocations of the stock of the company. So when the company is sold, both Bain as an entity as well as their individual partners profit from the sale of the investment company. In a lot of cases, allocations of the stock of the companies owned by Bain are given to Bain's owner and top managers, including Mitt Romney.

Any profits from the sale of the stock fom the investments doesn't accrue to the owners of the stock until the company is sold or taken public. So if when Mitt Romney stepped down as CEO of Bain, he still would have retained partial ownership of the companies owned at the time of his leaving the firm. Then in succeeding years, as those companies were sold, he value of his ownership shares would be paid to him, even though he had long since stepped away from active management of either Bain or the companies they invested in and owned.

So could Romney be "paid" even though not employed and actively managing Bain? Absolutely. Could a critic or political opponent construe those facts differently? That's pretty obvious, isn't it?