Goldman Sachs Group Inc chief executive Lloyd Blankfein’s compensation increased 14.5 percent to US$16.2 million last year despite a sharp decline in profits and share price during the year, leaving the bank open to more attacks on its pay policies.
Blankfein’s pay boost includes stock awards from previous years that vested last year, and therefore does not reflect the amount that Goldman’s board awarded him strictly for the company’s performance last year.
Goldman offered another figure, US$12 million, as the amount Blankfein received for his performance last year. That number reflects a 35.5 percent decline from 2010, when he received US$18.6 million in performance pay.
The US$16.2 million figure comes from a formula the US Securities and Exchange Commission (SEC) requires companies to use when reporting pay packages in proxy filings, where Goldman detailed Blankfein’s compensation on Friday.
Both the SEC’s formula and Goldman’s formula include a US$2 million salary and a US$3 million cash bonus. The SEC formula also reflects US$454,332 Blankfein received last year in benefits and perks, such as life insurance and a car and driver.
Whichever multimillion-dollar figure is used, Blankfein’s pay package is likely to get attention both outside and inside Wall Street’s most prominent investment bank, where thousands of traders, bankers and support staff were fired last year due to weak performance.
“Whether it’s US$12 million or US$16 million, it’s excessive,” said Jack Ucciferri, research and advocacy director at Harrington Investments Inc, a Goldman shareholder that has a proposal in Goldman’s proxy that, if passed, would require top executives to retain 75 percent of their stock holdings for at least three years after leaving the bank.
Goldman earned a US$2.5 billion profit last year, down from US$3.6 billion in 2010, and its share price fell 46 percent last year, amid a slowdown in investment banking deals and volatile trading conditions.
James Gorman, CEO of Goldman’s main rival, Morgan Stanley, received total compensation of US$13 million last year, down 14.5 percent from 2010.
Using the bank’s performance-based pay calculation, Morgan Stanley’s board awarded Gorman US$10.5 million for his work last year.
The only cash component was a salary of US$800,000.
That was down 31 percent from US$15.2 million the previous year.
Shareholder groups have been urging Wall Street banks to reform pay policies to align compensation more closely with shareholder interests.
The biggest US banks, including Goldman, have implemented compensation reforms, such as “clawback” provisions and putting more bonus money in the form of restricted stock, due to new regulatory requirements.
However, Goldman remains a particular target for activists because of its tendency to pay more than its competitors and because of high-profile conflict-of-interest issues involving senior bank officials in the aftermath of the financial crisis.
Laura Shaffer Campos, director of shareholder activities at the Nathan Cummings Foundation, one of the groups that proposed the annual pay review, said the increase in Blankfein’s compensation puts the bank’s reputation at risk.
“Given their stock’s lackluster performance and the ongoing focus on these issues by groups like Occupy Wall Street, this certainly gives us additional fuel for next year,” Campos said in an interview.