Carlyle Group Inc. said Chief Executive Officer Kewsong Lee stepped down, a setback to the private equity giant’s bid to navigate a generational transition during a period of market turbulence.

His sudden exit reverses a changing of the guard set in motion just five years ago when Carlyle’s founders ceded leadership duties to a new pair of co-heads. That arrangement didn’t last.

Lee, 56, became the sole boss in September 2020 after a power tussle that led to co-chief executive Glenn Youngkin leaving. Now, Lee’s exit has come as a surprise to many executives too. With his five-year employment agreement due to expire at the end of the year, Lee and board directors clashed over his contract in recent discussions, said a person familiar with the matter.

Co-Founder Bill Conway, current non-executive co-chairman, will step in as interim CEO during the search for a successor, the company said in a statement.

At the start of 2022, Carlyle bumped Lee’s base salary more than threefold to $1 million.

For all of the private equity industry’s attempts to tout its prowess at fixing and reshaping companies, many firms have struggled to navigate a smooth transfer of leadership and shake off the hallmarks of their founders.

Lee had been trying to diversify revenues, make profits less tied to markets’ boom-and-bust cycles and lift Carlyle’s stock price. That task is needed more than ever, with volatile markets making it harder to take companies public or sell them at high prices.

In his aggressive attempts to remake the firm, Lee — a former Warburg Pincus dealmaker who joined Carlyle in 2013 — made changes that at times put him at odds with the old guard. He tried to knit competing factions and restructure teams to make dealmakers work more closely together. He also staffed the top ranks with new faces and tried to shift the Washington-based firm’s power center toward New York.

Shares of Carlyle have dropped 31 percent this year, underperforming rivals including Blackstone Inc. and Apollo Global Management Inc.

Carlyle posted a 34 percent increase in distributable earnings in the second quarter, as it grew its credit business and boosted fee streams. Still, Lee said at the time that the industry faces an uncertain environment as the Federal Reserve moves to raise interest rates and tackle inflation. Valuations will need to reset before deal activity picks up across the industry, he said.

A newly formed search committee will help find a permanent successor, Carlyle said. The company also formed a CEO office to assist Conway and make a “seamless transition” once a replacement has been identified.