Goldman Gives Blankfein $5.4 Million Cash Bonus - First Since Financial Crisis
NEW YORK — Lloyd Blankfein, the CEO of Goldman Sachs Group Inc., saw his 2010 compensation rise to $14.1 million from just over $1 million in 2009, according to an Associated Press analysis of data filed with regulators on Friday.
Blankfein received a salary of $600,000, a cash bonus of $5.4 million and stock awards of $7.65 million for the year. He also received perks worth $464,067, including $185,110 for the use of a car, $62,020 for medical and dental coverage and the rest for life insurance, tax planning and retirement contributions. In addition, he was granted restricted stock valued at $12.6 million, up from $9 million in 2009, which is not counted in the total annual package because the grants are paid out over a period of three years.
Though his salary is among the top-tier for U.S. executives, it is a fraction of what it was just a few years ago.
Blankfein was known as one of the highest paid CEOs, taking home a package worth $42.9 million in 2008. However, Goldman's reputation took a beating during the financial crisis. Considered the leading Wall Street bank, Goldman has usually outdistanced its rivals with its trading and investment banking operations. But it was sharply criticized for its high compensation levels after it accepted a $10 billion government bailout during the financial crisis in 2008.
In 2009, Blankfein's compensation dropped to $1.03 million – his $600,000 salary, plus perks.
Goldman continued to face scrutiny in 2010 when the Securities and Exchange Commission brought a civil fraud lawsuit against the bank, charging it with misleading investors about securities based on risky mortgages. The investors lost close to $1 billion on the securities, while a Goldman client, Paulson & Co., profited from the investments, the government said. Goldman paid $550 million to settle the lawsuit.
In 2010, the bank's net income fell 37 percent to $7.71 billion due to sharp declines in its bond trading and investment banking businesses. Revenue slid 13 percent to $39.16 billion. The stock remained flat at about $168.
Goldman employees were paid $15.38 billion in salaries and bonuses, or 39.3 percent of its annual revenue, for 2010. That marked a 5 percent drop year-over-year. However, Goldman also allows employees to invest in private funds that it manages, the returns from which can dwarf their actual official pay. In 2010, Blankfein received $27.2 million from his investments in these funds. Other top executives including Chief Operating Officer Gary Cohn, Chief Financial Officer David Viniar and Vice Chairman Michael Evans received returns ranging between $13 million and $20 million.
The bank said in January that its board has more than tripled Blankfein's salary to $2 million for 2011, and also tripled salaries to $1.85 million for four others including Cohn, Viniar, Evans and fellow Vice Chairman John Weinberg. The salaries don't include stock, options and other compensation that executives typically receive as part of their pay package.
The bank earlier this month received regulators' permission to repay Warren Buffett's Berkshire Hathaway Inc. for the $5 billion investment it made at the height of the financial crisis in the fall of 2008. The Federal Reserve also approved Goldman's overall capital spending plan for 2011, including the repurchase of common stock and a possible increase in the bank's quarterly dividend.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
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04/ 1/11 11:54 PM ET Associated Press