January 18, 2013 7:36 pm

Goldman doubles Blankfein stock bonus

Goldman Sachs has nearly doubled the stock bonus given to Lloyd Blankfein, in a move that is likely to make the bank chief executive the best paid on Wall Street.

News of Mr Blankfein’s increased stock bonus comes two days after the New York-based investment bank reported its most profitable quarter in about three years. It also comes two days after JPMorgan said it was cutting the bonus of Jamie Dimon, its chief executive, in half following the bank’s embarrassing $6bn trading loss.

Mr Blankfein was given 94,320 restricted shares worth about $141 each, based on Thursday’s closing price, according to a regulatory filing made on Friday. That makes Mr Blankfein’s 2012 share bonus worth $13.3m – up from $7m in 2011.

Goldman did not disclose the amount of Mr Blankfein’s cash bonus in Friday’s filing, though he usually receives about 70 per cent of his compensation in stock, according to people familiar with the process. That would make a total cash and stock bonus of about $19m, on top of Mr Blankfein’s annual salary of about $2m.

A pay package of $21m for 2012 looks likely to make Mr Blankfein the highest-paid chief executive on Wall Street. Jamie Dimon, chief executive at JPMorgan Chase, took the highest-paid spot last year with a $23m payout for his work in 2011.

But Mr Dimon is now set to receive a cash and stock bonus of $10m for his work last year – about half of the $20m he received for 2011. That would give him a total compensation package of $11.5m, taking into account his 2012 salary of $1.5m.

Other banks will announce the bonuses for their chief executives in the coming weeks.

While Mr Blankfein may end up the highest paid chief executive on Wall Street, he could face a challenge from the west coast. John Stumpf, chief executive of the fast-growing and retail-focused Wells Fargo, earned $19.8m for his work in 2011.

“Goldman Sachs has historically been very careful about how their pay has been portrayed,” said Aaron Boyd, head of research at Equilar, which compiles executive compensation data. “He’s been sort of middle of the pack as far as pay is concerned compared to the other Wall Street CEOs.

“We’ll see what happens with Morgan Stanley, Citigroup and Bank of America,” he added.

The increase in Mr Blankfein’s bonus is a sharp reversal to his remuneration for 2011, when lacklustre earnings led to the chief executive’s lowest payout since 2009.

However, it is still far below the almost $70m a year that Mr Blankfein was raking in before the financial crisis.

Other Goldman executives were also granted shares.

Gary Cohn, president and chief operating officer, and David Viniar, the bank’s outgoing chief financial officer, each received about $12m worth of stock.

In the years since the crisis, Goldman has been attempting to strike a delicate balance between trimming expenses during the current downturn in the banking industry, and having the necessary people and new technology to generate stronger revenues in a recovery. But the bank bit the bullet in the fourth quarter by chopping pay for its bankers by 11 per cent to $1.98bn to help boost profits.

What I think Goldman Sachs did exceptionally well for themselves is they were able to make both shareholders and employees happy

- Glen Schorr, Nomura banking analyst

Remuneration as a percentage of revenues fell to 21 per cent in the last quarter of the year, one of the lowest ratios since Goldman went public in 1999.

But while pay and bonuses fell in relation to the investment bank’s revenues and as a total balance sheet expense, Goldman still managed to boost compensation per employee in absolute terms thanks to a 3 per cent cut in headcount in 2012.

Goldman staff took home an average $399,506 last year, compared to $367,057 in 2011.

“What I think Goldman Sachs did exceptionally well for themselves is they were able to make both shareholders and employees happy,” said Glen Schorr, banking analyst at Nomura.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.