Goldman CEO Blankfein's 2011 Compensation Jumps to $16M
Goldman Sachs Group Inc Chief Executive Lloyd Blankfein's compensation increased 14.5 percent to $16.2 million in 2011 despite a sharp decline in profits and share price during the year, leaving the bank open to more attacks on its pay policies.
Blankfein's pay boost includes stock awards from previous years that vested in 2011, and therefore does not reflect the amount that Goldman's board awarded him strictly for the company's performance last year.
Goldman offered another figure, $12 million, as the amount Blankfein received for his performance last year. That number reflects a 35.5 percent decline from 2010, when Blankfein received $18.6 million in performance pay.
The $16.2 million figure comes from a formula the U.S. Securities and Exchange Commission requires companies to use when reporting pay packages in proxy filings, where Goldman detailed Blankfein's compensation on Friday.
Both the SEC's formula and Goldman's formula include a $2 million salary and a $3 million cash bonus. The SEC formula also reflects $454,332 Blankfein received last year in benefits and perks, such as life insurance, and a car and driver.
Whichever multi-million-dollar figure is used, Blankfein's pay package is likely to get attention both outside and inside Wall Street's most prominent investment bank, where thousands of traders, bankers and support staff were fired last year due to weak performance.
Goldman earned a $2.5 billion profit last year, down from $3.6 billion in 2010, and its share price fell 46 percent over 2011, amid a slowdown in investment banking deals and volatile trading conditions.
Management reduced the average employee's pay by 15 percent last year, to $367,057. That compares with a pre-crisis high of $568,732 per Goldman employee in 2007. The median household income in the United States is about $50,000.
James Gorman, the CEO of Goldman's main rival Morgan Stanley , received total compensation of $13 million in 2011, down 14.5 percent from the previous year. Using the bank's performance-based pay calculation, Morgan Stanley's board awarded Gorman $10.5 million for his work last year, whose only cash component was a $800,000 salary. That was down 31 percent from $15.2 million the previous year.
Shareholder groups have been urging banks across Wall Street to reform pay policies to align compensation more closely with shareholder interests.
The biggest U.S. banks, including Goldman, have implemented compensation reforms, such as clawback provisions and putting more bonus money in the form of restricted stock, due to new regulatory requirements.
But Goldman remains a particular target for activists because of its tendency to pay more than competitors, and because of high-profile conflict-of-interest issues involving senior bank officials in the aftermath of the financial crisis.
In its proxy filing on Friday, Goldman detailed a executive compensation proposal by a shareholder named John Harrington, who wants Goldman to require top executives to hold 75 percent of their company stock for at least three years following their departure from the bank. Goldman recommends shareholders vote against the proposal.
The SEC rejected a proposal by another group of religiously affiliated Goldman investors who wanted the company to implement a review of executive pay packages.
"Our engagement with shareholders, in particular, has provided a productive opportunity to garner feedback on what we can do better and for our shareholders to learn more about the Board's priorities," Blankfein said in a letter to shareholders on Friday. "We received valuable input from shareholders following our say on pay vote last year, which reaffirmed our long-held view that pay-for-performance is the most critical aspect of compensation."
Goldman also reported compensation for its four other named executive officers: Gary Cohn, president and chief operating officer; David Viniar, chief financial officer; J. Michael Evans, vice chairman and head of emerging markets; and John Weinberg, vice chairman and co-head of investment banking.
Each of these executives received performance-based pay of $11.85 million last year, which included a $1.85 million salary and a $3 million bonus.
Using the SEC's calculation of 2011 pay, which includes previous years' awards that vested in 2011, Cohn, Viniar and Weinberg received $15.8 million last year, while Evans received $15.7 million.