Goldman Gives Blankfein $5 Million Long-Term Incentive

Photographer: David Paul Morris/Bloomberg

Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc. Close

Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc.

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Photographer: David Paul Morris/Bloomberg

Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc.

Goldman Sachs Group Inc. (GS) awarded Chief Executive Officer Lloyd C. Blankfein a $5 million cash bonus to be paid out in three years if he meets certain targets, on top of $21 million in 2012 compensation.

The long-term incentive was $3 million last year and $7 million in 2011 when the program began, the New York-based bank said today in a filing. The awards can shrink or grow depending on whether the firm achieves a 10 percent average return on equity and 7 percent average increase in book value per share.

Wall Street firms including Goldman Sachs, which already gives a portion of top executives’ pay in restricted stock, have been seeking ways to encourage managers to focus on long-term performance. Goldman Sachs’s plan gives the board’s compensation committee, led by former Fannie Mae CEO James A. Johnson, the power to change the awards to so-called named executive officers, or NEOs.

“Our compensation committee may also, in its sole discretion based on its assessment of an individual NEO’s performance, adjust the amounts that may be paid under this award,” according to the filing, which says the committee can give from zero to 150 percent of the amount due.

The firm also granted President Gary D. Cohn a $5 million long-term award this year. Vice Chairmen J. Michael Evans and John S. Weinberg got $4 million incentives. Last year, all of the firm’s executives named in the proxy received $3 million in long-term incentives, down from $7 million for all of the executives in 2011.

Viniar’s Exception

While the Goldman Sachs awards are initially tied to three-year periods, the board can opt to extend the measurement for another five years. In December, the compensation committee set the performance period for the 2011 incentive pay to end in December 2018 instead of December 2013.

One exception is for David A. Viniar, who retired as chief financial officer at the end of January. He will receive any 2011 incentive pay in January 2014 and any 2012 long-term grant in January 2015, according to today’s proxy filing.

“The board’s ability to change the long-term incentive measures whenever it wants to, and with respect to any individual it singles out, makes the plan a joke because you can be sure the adjustments that are made will be to give an executive a better chance at getting the money,” said Erik Gordon, a professor at the University of Michigan’s law school and business school.

Goldman Sachs’s top executives also received payouts from funds managed by the firm during the year, including profits, return of money invested, and their portion of the funds’ management fees, known as overrides. Those payouts during 2012 totaled $31.2 million for Blankfein, $25.8 million for Cohn, $22.2 million for Viniar, $21.3 million for Evans, and $9.6 million for Weinberg, according to the proxy.

Other recipients of such fund distributions included Vice Chairman Michael S. Sherwood with $18.7 million; General Counsel Gregory K. Palm, with $29.7 million; and Chief of Staff John F. W. Rogers, with $9.9 million, the proxy showed.

To contact the reporters on this story: Michael J. Moore in New York at mmoore55@bloomberg.net Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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