Goldman Sachs Gives Blankfein $7 Million Long-Term IncentiveMichael J. Moore
Goldman Sachs Group Inc. awarded Chief Executive Officer Lloyd C. Blankfein a $7 million bonus to be paid out in eight years if the firm meets certain targets, on top of $24 million in other compensation for 2014.
The long-term award can shrink or grow based on whether the firm achieves return-on-equity and book-value targets, the New York-based bank said Friday in a filing. Blankfein’s total package of $31 million includes $14.67 million in restricted shares, half of which are tied to return on equity, a $7.33 million cash bonus and a $2 million salary.
Blankfein, 60, was the highest-paid CEO among peers at the largest U.S. banks for a third straight year. Goldman Sachs had an 11 percent return on equity in 2014, topping its largest Wall Street competitors, as it relied on revenue gains in investment banking and asset management to counter trading revenue that fell to the lowest since 2005.
The firm’s compensation committee made several changes to the structure of executive pay based on feedback from shareholders, the company said in the filing. James A. Johnson, the former head of Fannie Mae and the longest serving member of Goldman Sachs’s board, leads the committee.
For the first time, Goldman Sachs made the delivery of half the restricted shares dependent on reaching a specific goal. Blankfein and other leaders will get the targeted amount if they reach an average 11 percent ROE over the next three years and can get more if they exceed that.
Details of Blankfein’s pay were contained in the bank’s proxy statement for its annual shareholders’ meeting, which will be held on May 21 in San Francisco.
Blankfein’s total compensation package of $31 million was up from $29 million a year earlier. It topped the $22.5 million for Morgan Stanley CEO James Gorman, 56, and the $20 million given to JPMorgan Chase & Co. CEO Jamie Dimon, 59. Bank of America Corp. CEO Brian T. Moynihan, 55, and Citigroup Inc.’s Michael Corbat, 54, each got $13 million.
Wall Street firms including Goldman Sachs, which already awards a majority of top executives’ pay in restricted stock, have been seeking ways to encourage managers to focus on long-term performance. Blankfein’s long-term incentive was $6 million last year and $5 million in 2013.
Goldman Sachs changed the awards to measure an eight-year period and be paid out after that time. Previously, they were tied to three-year periods, and the board could opt to extend the measurement for an additional five years. The board has extended all the eligible awards so far.
The bank also eliminated the compensation committee’s ability to adjust the value of the awards based on individual performance.
President Gary D. Cohn, Chief Financial Officer Harvey M. Schwartz and Vice Chairman Michael S. Sherwood were all granted a $6.7 million long-term award this year, bringing each of their total pay packages to $28.7 million. Vice Chairman Mark Schwartz received $23 million in total pay, including a $4 million incentive.
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. Including those overrides, the payouts during 2014 totaled about $23.6 million for Blankfein, $9.3 million for Cohn, and $3.7 million for Harvey Schwartz.
Gregory K. Palm, the bank’s general counsel, received $19.3 million of such payouts, while former CFO David Viniar, who now serves on the firm’s board, got $13.8 million.