Carl Icahn agreed to allocate as much as $3 billion to a management duo composed of his son Brett and David Schechter, expanding their role in running the 76- year-old’s investments.

Under a 46-page legal agreement filed with federal regulators last month, Brett Icahn and Schechter will get to invest their boss’s capital in companies with stock market values between $750 million and $10 billion. The deal may free the elder Icahn, who still has final say over many aspects of the portfolio, to focus on larger targets for shareholder activism.

Brett, who turns 33 this month, along with Schechter has been running $300 million for his father, who owns more than 90 percent of Icahn Enterprises LP, a holding company with $24 billion in assets including activist investing partnerships as well as the Tropicana casinos, an oil refiner and an auto-parts maker. The arrangement expires after Carl turns 80 in 2016, giving Brett the chance to both prove his mettle as a successor and develop a track record to start his own hedge fund.

“It’s a pretty nice gesture by the old man,” said Michael McAllister, a partner at Satterlee Stephens Burke & Burke LLP in New York who specializes in employment law within the securities industry. “If the son doesn’t meet the standard Carl is looking for, it gives Brett an opportunity to go out and earn his own.”

After hiring Brett as an investment analyst a decade ago, Icahn allocated the $300 million to his son and Schechter in April 2010 to invest in loans and securities of companies with less than $2 billion in equity value. Their investments, internally dubbed the Sargon portfolio, generated a gross cumulative gain of 96 percent by the end of June, according to a July 27 filing with the U.S. Securities and Exchange Commission.

‘Can’t Complain’

Schechter joined the firm in 2004 after working at a Citigroup Inc. unit that used the bank’s capital to invest in distressed companies. Schechter, who earned an economics degree from the University of Pennsylvania, serves on the boards of several companies in which Icahn holds stakes, including WebMD Health Corp. (WBMD) and auto-parts supplier Federal-Mogul Corp. (FDML)

“These two guys doubled our money over the last two years,” the elder Icahn said in an interview. “You can’t complain about that.” Brett didn’t return an e-mail seeking comment.

Source: Yahoo Finance News