Financial Services

Goldman Sachs cut CEO’s annual compensation by 27%

Lloyd Blankfein awarded $22m for 2016 after long-term incentive award was eliminated

Chief executive officer of Goldman Sachs Lloyd Blankfein: he received $30m for 2015, including a $7m long-term incentive award that pays out over eight years

Fri Mar 17 2017 - 16:52

Goldman Sachs reduced chief executive officer Lloyd Blankfein’s annual compensation 27 per cent, awarding him $22 million (€20.4m) for 2016 after eliminating a long-term incentive award.

Mr Blankfein (62) received $16 million in performance shares and a $4 million cash bonus, in addition to his $2 million salary, the New York-based firm said on Friday in its annual proxy filing. Unlike past years, all of the CEO’s equity-based awards were linked to performance.

Goldman Sachs redesigned its compensation structure for 2016 after investors told the company that the long-term incentive part of the package was overly complex. The bank also changed the performance-based awards to reflect the bank’s relative performance.

Mr Blankfein received $30 million for 2015, including a $7 million long-term incentive award that pays out over eight years. Gary Cohn, Goldman Sachs’s president before leaving to become President Donald Trump’s top economic adviser, received $20 million for 2016, as did chief financial officer Harvey Schwartz.

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The bank increased the share of Mr Blankfein’s compensation that is tied to performance to 80 per cent of his variable pay by linking all of his stock awards to absolute and relative return on equity, compared with eight other global banks. In prior years a portion of the shares had been tied only to a requirement that he remain in the job. The change also was made for Mr Schwartz ( 53).

Half in cash

The awards will pay out half in cash and half in stock. In prior years the performance-based awards were paid out solely in cash.

Proxy adviser Glass Lewis & Co raised concerns about the long-term incentive plan in a report last year, calling it “troubling both in its design and lack of transparent disclosure” and that it could “generate excessive payouts”.

Goldman Sachs received about two-thirds support from shareholders for its 2015 executive compensation decisions, the lowest result since the bank introduced annual advisory votes on pay in 2009. In response, the bank sought feedback from investors holding about 40 per cent of its stock.– Bloomberg

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