Goldman Sachs’s Blankfein Receives $9 Million Bonus for 2009
Goldman Sachs Group Inc. gave Chairman and Chief Executive Officer Lloyd Blankfein a $9 million all-stock bonus for 2009, about half the award granted by JPMorgan Chase & Co. to CEO Jamie Dimon, even as profit reached an all-time high and the shares doubled.
“This is certainly lower than my best estimate would have been,” said Rose Marie Orens, a senior partners at Compensation Advisory Partners in New York. “There was a very definite decision that they weren’t going to have the discussion be all about them and pay.”
Goldman Sachs, the most profitable securities firm in Wall Street history, this year cut the percentage of revenue earmarked for pay to the lowest in a decade as a public company. The New York-based firm aimed to allay anger about banks whose profits and pay rebounded within a year of taking government bailouts while the U.S. jobless rate was about 10 percent.
The bonus falls far short of the Wall Street record that Blankfein, 55, set with his $67.9 million bonus in 2007 and compares with Dimon’s award, also announced yesterday, of about $17 million in restricted stock and options.
“They’re trying to be cognizant of public perception,” said Joseph Sorrentino, a managing director at Steven Hall & Partners LLC, a New York-based executive compensation consulting firm. “It’s more reflective of the current environment that everyone is dealing with than absolute performance.”
Blankfein’s payment of 58,381 restricted stock units, valued at $9 million at yesterday’s closing price of $154.16, was disclosed in a filing with the U.S. Securities and Exchange Commission. He received the same bonus as Chief Financial Officer David Viniar, President Gary Cohn, and Vice Chairmen J. Michael Evans and John S. Weinberg.
Goldman Sachs reported net income of $13.4 billion in 2009’s fiscal year, outpacing the $11.6 billion profit in 2007, its next best year. The shares doubled last year to $168.84.
Jeanne Branthover, head of the financial-services practice at Boyden Global Executive Search, said Goldman Sachs bonuses are justified by the performance.
“When you look at the ratio of what these leaders have done financially, they are not huge numbers,” she said in a phone interview.
Morgan Stanley Chairman John Mack, 65, didn’t take any bonus for 2009, the last year he was CEO. James Gorman, 51, who succeeded Mack as CEO at the start of this year, was awarded deferred stock grants valued at about $8.6 million for 2009.
By contrast, the real median household income in the U.S. fell 3.6 percent in 2008 to $50,303, according to a U.S. Census Bureau report published in September.
JPMorgan waited three weeks after reporting 2009 earnings to release details of the bonus for Dimon, 53, while Goldman Sachs delayed more than two weeks, fanning speculation that each firm wanted to see their rivals’ pay details first. Firms typically release executive pay details within days of the earnings report.
The fact that Blankfein received less than Dimon shows that the firm is bending to public outrage about the U.S. Treasury’s Troubled Asset Relief Program, which helped bail out the banks during the crisis, said Steven Hall’s Sorrentino. Goldman Sachs, JPMorgan Chase and Morgan Stanley were among the first banks to repay the government last year.
“In a different environment, absent TARP and absent the recession, maybe they would pay out more,” Sorrentino said.
Goldman Sachs said in December that the top 30 employees would receive all of their year-end incentive pay in stock that they can’t sell for five years. Blankfein’s bonus, which he gets on top of his $600,000 salary, is subject to that restriction.
While a large portion of Goldman Sachs’s executive compensation has traditionally been in stock, they’ve also received cash awards.
Since 2002, when his pay was first disclosed in annual proxy filings, Blankfein has received a total of $111.6 million in salary and cash bonuses. Viniar has been granted $100.8 million in salary and cash bonuses since 1999, the year the firm went public, according to proxy filings.
“They have plenty to live on; you’re talking about people who don’t live from check to check,” Orens said. “Their future really is tied to that stock price. So if they besmirch their brand or get the government so mad they really do take away a lot of things they like to do then they’ve jeopardized their future.”
Neither Cohn, 49, nor Viniar, 54, received bonuses for 2008. For 2007, Cohn was awarded a $66.9 million bonus in cash and stock, while Viniar got $56.9 million in cash and stock.
Yesterday’s filings also showed restricted stock awards worth about $8.8 million each for Gregory Palm and Esta Stecher, the firm’s general counsels, about $8 million for Global Head of Compliance Alan Cohen, and $5.8 million for Sarah Smith, the principal accounting officer.
Goldman Sachs paid back the $10 billion it received in October 2008 from the U.S. Treasury on June 17; taxpayers earned $1.4 billion from dividends and a buyback of warrants that had been granted to the agency. Still, the firm benefited from government guarantees on about $30 billion of debt and from the Federal Reserve’s bailout of American International Group Inc., as well as the Fed’s decision to allow Goldman Sachs to become a bank holding company.
“Goldman has been portrayed as kind of the villain in this,” Sorrentino said. “They kind of have a target on their back.”