Goldman Sachs Group'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 Lloyd Blankfein (56) is poised to receive about $24.3 million in January, based on the closing share price on December 14th, while president Gary Cohn (50) will get about $24 million, company filings show. The payouts, just a portion of the $67.9 million bonus awarded to Mr Blankfein for 2007 and the $66.9 million paid to Mr Cohn, reflect a 24 per cent 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 US 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 US 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 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. Mr Blankfein and Mr 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 December 10th 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 per cent to 28 per cent from last year, according to Options Group, an executive search and compensation consultant firm in New York.
Bloomberg
