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Goldman Partners Exercise $77 Million of 2008 Options

Goldman Sachs Partners Collect $77 Million on Crisis-Era Options
A trader works in the Goldman Sachs Group Inc. booth on the floor of the New York Stock Exchange. Photographer: Scott Eells/Bloomberg

Goldman Sachs Group Inc. partners exercised options awarded at the end of 2008, benefiting from a doubling in the firm’s stock price since the financial crisis.

Sixty-four partners exercised options last month that yielded them $77 million in shares, after covering the cost of the options and some tax withholding, according to a Feb. 7 regulatory filing. Gregory A. Agran, who runs the New York-based firm’s commodities unit, received $7.1 million of stock, while Steve Strongin, 55, head of global investment research, netted $4 million.

In December 2008, Goldman Sachs granted 36 million options in an effort to give top performers an incentive to stay after the bank reduced pay costs by almost half during the financial crisis. That grant was more than five times the number of options the firm awarded in the three previous years.

The options show that Wall Street employees received substantial awards even after the largest U.S. banks accepted government support amid the worst credit crisis since the Great Depression. They also echo regulators’ desire to have bonuses tie employee incentives to the long-term performance of the bank, as partners have had to wait more than five years to reap the gains.

Top Executives

The options vested over three years ended in January 2012, and shares gained through such awards couldn’t be sold until this year. More than 34.1 million options were still outstanding at the end of 2012. The contracts would be collectively worth about $2.86 billion today if none had been exercised, according to data compiled by Bloomberg. Banks typically book the cost of stock awards when they vest.

Partners exercised 1.73 million options on Jan. 27, according to last week’s filing. David Wells, a Goldman Sachs spokesman, declined to comment on the filing.

The investment bank’s top leaders didn’t receive the options, as Chief Executive Officer Lloyd C. Blankfein, 59, and President Gary D. Cohn, 53, took no bonus for 2008. Chief Financial Officer Harvey M. Schwartz, 49, who was co-head of the firm’s trading unit in 2008, has 302,888 options, according to a filing last year.

The awards were granted at an exercise price of $78.78. The shares closed last week at $161.93, after climbing more than 38 percent each of the past two years.

The Feb. 7 filing listed 426 partners, who owned 11 percent of common shares. That was down from 462 partners owning 11.6 percent a year earlier.

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