Goldman Officers to Reap $111 Million Payout From 2007, 2009
By Michael J. Moore and Christine Harper - Dec 15, 2010 6:19 PM ET
Goldman Sachs Group Inc.’s top executives will get about $111.3 million in stock next month in a delayed payout from last year and their record-setting 2007 awards, even as Wall Street prepares for lower bonuses.
Chief Executive Officer Lloyd C. Blankfein, 56, is poised to receive about $24.3 million in January, based on the closing share price on Dec. 14, while President Gary D. Cohn, 50, will get about $24 million, company filings show. The payouts, just a portion of the $67.9 million bonus awarded to Blankfein for 2007 and the $66.9 million paid to Cohn, reflect a 24 percent decline in the stock’s value since it was granted at $218.86.
Within a year after the bonuses were approved, Goldman Sachs took $10 billion of U.S. bailout funds, converted to a bank and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs. This year the New York-based firm paid $550 million to settle U.S. regulators’ fraud charges related to a mortgage security the company sold in 2007.
“Clearly we now look back and say, ‘Were things fine? Should they have paid? Maybe not,’” said Jeanne Branthover, a managing director at recruitment firm Boyden Global Executive Search in New York. “There’s nothing you can do about it. The payouts were in stone. But hopefully, in the future, they won’t be.”
Since the 2008 credit crisis wiped out competitors such as Lehman Brothers Holdings Inc. and led to unprecedented government assistance to financial institutions, regulators have encouraged banks to pay senior employees with deferred stock and recoup payouts if trading strategies backfire. Blankfein and Cohn, who received cash awards of $27 million and $26.6 million respectively for 2007, didn’t get any bonuses for 2008 and received only restricted stock for 2009.
Goldman Sachs announced on Dec. 10, 2009, that all 30 members of its management committee would receive only restricted stock for their year-end bonuses. The company hasn’t made a similar announcement this year. Through the first nine months of 2010, Goldman Sachs set aside $13.1 billion to cover compensation and benefits expenses, or enough to pay each of its 35,400 employees $370,706 apiece. A year earlier, the average was $527,192 per employee.
The payments come as bonuses across Wall Street are expected to decline. Compensation for trading and investment- banking employees is likely to be down 22 percent to 28 percent from last year, according to Options Group, an executive search and compensation consultant firm in New York. Morgan Stanley has told some employees to expect investment-banking bonuses to decline 10 percent to 30 percent, two people briefed on the matter said earlier this month.
Goldman Sachs’s 23 percent share-price decline from the last day of 2007 compares with a 16 percent drop in the Standard & Poor’s 500 Index over the same period and a 47 percent plunge in the S&P 500 Financials Index. While the firm’s profit tumbled 80 percent in 2008 from the $11.6 billion earned in 2007, last year the company recovered to post a $13.4 billion record profit. So far this year earnings have been lower.
Among the scheduled January payouts are $21.3 million to Chief Financial Officer David Viniar; $20.8 million to former co-president Jon Winkelried, who left the firm in March 2009; and $14.3 million to Edward C. Forst, co-head of investment management, who left in 2008 and returned to Goldman Sachs a year later.
The amounts are based on the Dec. 14 closing share price of $167.33, which is likely to change by the time the stock is delivered next month.
David Wells, a spokesman for Goldman Sachs in New York, declined to comment...
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