Blankfein Sought U.S. Blessing on Executive Pay, Feinberg Says

Lloyd Blankfein, CEO of Goldman Sachs Group Inc.
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc. Photographer: Joshua Roberts/Bloomberg

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein sought the U.S. government’s blessing on the pay of top employees -- even though he didn’t have to, according to a former Treasury Department official.

“I had no jurisdiction over Goldman, but Goldman had me up there to see Blankfein four times,” Kenneth Feinberg, the administration’s former special master on executive compensation, said in an interview released yesterday by the Financial Crisis Inquiry Commission.

President Barack Obama named Feinberg to the role in June 2009 amid public outcry over pay at Wall Street firms that got taxpayer-funded bailouts. Feinberg supervised pay at seven firms including Citigroup Inc., Bank of America Corp. and American International Group Inc. Goldman Sachs wasn’t among them.

“Goldman was under such political pressure that Goldman might as well have been an eighth company,” Feinberg said in an interview with two FCIC staffers in September.

“Ken, if we do it this way, if we only pay our people $600,000 cash, and any bonus that they get, they get in stock, and they won’t get it for five years, am I doing OK,” Feinberg said, recalling a conversation with Blankfein. “Yeah, you’re making some improvements, Lloyd. That’s good.”

Goldman Sachs spokesman Michael DuVally declined to comment on Feinberg’s interview with the FCIC.

‘Very Sensitive’

Goldman Sachs was “very sensitive to the public reaction to their compensation program based on the visibility they had in the crisis,” Mark Borges, a compensation consultant with Compensia Inc. in Corte Madera, California, said in an interview. “They at least wanted to make sure that what they were doing was consistent with the principles he was using.”

In December 2009, New York-based Goldman Sachs said its top 30 executives would receive their entire year-end bonus in stock that would be locked up for five years. Two months later, Feinberg said he thought Blankfein had “to a large extent” adopted the special master’s recommendations on limiting cash salaries and paying bonuses in long-term stock.

Blankfein read aloud a three-page document at Goldman Sachs’s May 2009 shareholder meeting outlining its compensation principles, which are posted on the firm’s website.

Feinberg reduced compensation at companies including AIG, Citigroup and Bank of America. He left in September to become administrator of BP Plc’s fund to pay claims stemming from the Gulf of Mexico oil spill. Patricia Geoghegan, a Treasury Department lawyer, was named acting special master.


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