Goldman Sachs Group Inc. (GS) awarded employees restricted stock worth $2.3 billion for their 2013 performance, the smallest amount in two years as the firm cut costs by lowering the portion of revenue it set aside for pay.
The firm granted 13.8 million restricted shares that vest over several years, New York-based Goldman Sachs said today in its annual regulatory filing. The value, down from $2.4 billion a year earlier, is based on the closing price on Jan. 28, when senior executives were given their awards.
Chief Executive Officer Lloyd C. Blankfein, 59, cut compensation to 37 percent of revenue last year, the second-lowest portion since the firm went public in 1999. That contributed to a 6 percent increase in net income even as revenue was little changed.
Banks have been seeking to balance regulatory pressure to tie awards to long-term performance with shareholders’ desire for flexibility to cut pay costs if needed. Goldman Sachs Chief Financial Officer Harvey M. Schwartz, 49, has said the firm is reluctant to ramp up the amount of pay it defers because it is “a bit of mortgaging the future.”
Goldman Sachs said about 70 percent of the restricted stock awards were recognized as expenses immediately. The cost recorded by the firm is probably lower than the current value of the shares because the bank accounts for the fact that employees can’t immediately sell the shares.
Morgan Stanley (MS), owner of the world’s largest brokerage, gave employees $2.72 billion in deferred awards for 2013 performance, including $1.25 billion of restricted stock and $1.47 billion of deferred cash. About $100 million of the awards were expensed in 2013.
Goldman Sachs didn’t disclose any deferred cash awards, and the firm hasn’t typically given such bonuses.