After all the hoohah and wild reports about $100m pay-outs, Goldman Sachs on Friday made a big move against the backlash over its compensation practices, saying it would award chief executive Lloyd Blankfein a mere $9m stock bonus for 2009, far lower than his payouts in the boom years preceding the financial crisis.
In fact, Blankfein’s payout marks a painful 87 per cent drop from the $68m he received in cash, stock and options two years ago. That 2007 bonus stands as a record for a chief executive at a publicly traded Wall Street bank.
However, it’s immeasurably better than the big fat zero bonus that Goldman gave its top executives bonuses in 2008, amid the global financial turmoil. The bank said late last year that none of its top 30 managers would receive their annual payouts in cash.
Although he has the satisfaction of proving a certain newspaper that reported the $100m bonus story wildly wrong, it was undoubtedly irkesome for Blankfein to read weekend reports about how JPMorgan Chase awarded its top executive, Jamie Dimon, an all-stock bonus of about $17m for 2009.
Just like Goldman, JPMorgan emerged from the crisis stronger than most of its rivals. And for that, Dimon gets nearly double the bonus that Blankfein receives.
Life can be so unfair.
Commenting on the Goldman move, Charles Elson, a professor of corporate governance at the University of Delaware, said Goldman was “clearly responding to public pressure“.
“The question is, if the public pressure subsides, will they go back to the old levels of compensation? More generally, Wall Street has to deal with the fact that so much of its revenues go to compensation.”
At least, though, Blankfein can draw some comfort from the fact that Morgan Stanley’s new CEO, James Gorman, who succeeded John Mack, declined a cash bonus and will receive a paltry $8m-plus in restricted shares and deferred stock units. And Barclays, it should be remembered, is deferring up to 100 per cent of bonuses for top staff.
Related links:
Feinberg on Blankfein: fail (maybe) - FTAlphaville
The Blankfein bonus: $9m in stock (updated) - FTAlphaville
Media-fuelled Goldman bonus neurosis – FTAlphaville