Goldman Cuts Blankfein's Pay to $22 Million for 2016

  • Bank also eliminate’s CEO’s long-term incentive award
  • Compensation structure changed to reflect relative performance

Goldman Sachs Group Inc. reduced Chief Executive Officer Lloyd Blankfein’s compensation 27 percent, awarding him $22 million for 2016 after eliminating a long-term incentive award.

Blankfein, 62, received $16 million in performance shares and a $4 million cash bonus, in addition to his $2 million salary, the New York-based firm said Friday in its annual proxy filing. Unlike past years, all of the CEO’s equity-based awards were linked to performance.

Goldman Sachs redesigned its compensation structure for 2016 after investors complained that the long-term incentive was overly complex. The bank also changed the performance-based awards to reflect the company’s relative performance. The changes came after an advisory vote on pay at last year’s annual meeting received the least support since such votes were instituted in 2009.

Blankfein becomes the third-highest paid CEO of the six largest U.S. banks. JPMorgan Chase & Co.’s Jamie Dimon received $28 million; Morgan Stanley’s James Gorman $22.5 million; Bank of America Corp. Brian T. Moynihan $20 million; and Citigroup Inc.’s Mike Corbat $15.5 million. Wells Fargo & Co.’s Tim Sloan, who became CEO in October, got $12.8 million.

Gary Cohn, Goldman Sachs’s president before leaving to become President Donald Trump’s top economic adviser, received $20 million for 2016, as did Chief Financial Officer Harvey Schwartz and Michael Sherwood, a vice chairman who left last year.

Cohn and his wife also received about $12.1 million from selling their stakes in hedge funds and private-equity funds managed by the firm. The divestment was required by ethics guidance Cohn received as part of his move to the government.

Performance Shares

Goldman Sachs increased the share of Blankfein’s compensation that’s tied to performance to 80 percent of his variable pay by linking all of his stock awards to absolute and relative return on equity, compared with eight other global banks. In prior years, a portion of the shares had been tied only to a requirement that he remain in the job.

The change also was made for Schwartz, 53, who was named with David Solomon to replace Cohn as co-presidents of the firm. The awards will pay out half in cash and half in stock. In prior years, the performance-based awards were disbursed solely in cash.

Proxy adviser Glass Lewis & Co. raised concerns about the long-term incentive plan in a report last year, calling it “troubling both in its design and lack of transparent disclosure,” and said it could “generate excessive payouts.”

Goldman Sachs received about two-thirds support from shareholders for its 2015 executive compensation decisions, the lowest result since the bank introduced annual advisory votes on pay in 2009. In response, the firm sought feedback from investors holding about 40 percent of its stock.

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