Management

Goldman Boosts Base Salaries of Partners - WSJ.com

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BUSINESS January 29, 2011

LLOYD BLANKFEIN

By L I Z R A P P A P O R T

Goldman Sachs Group Inc. boosted the base salary of its executives and partners for the first time since the securities firm went public in 1999, tripling Chief Executive Lloyd Blankfein's salary to $2 million.

The move, disclosed in a securities filing late Friday, is the latest sign of how Wall Street's pay culture is moving away from bonuses criticized for fueling reckless risk-taking that contributed to big losses during the financial crisis. Goldman's salary increases, which affect all 470 partners out of the company's 36,500 employees, follow similar announcements by Bank of America Corp., Citigroup Inc. and Morgan Stanley .

Regulators and lawmakers are pushing Wall Street firms to dole out higher salaries and smaller bonuses. Some regulators contend that doing so will encourage employees to focus on longer-term performance.

Goldman also disclosed the restricted-stock awards made as bonuses to numerous top executives for 2010. Mr. Blankfein, who also is Goldman's chairman, got $12.6 million, or 78,111 shares based on the company's stock price Wednesday, according to a separate filing Friday. The restricted- stock award is 40% higher than his $9 million bonus for 2009.

The restricted shares will vest over three years, and Mr. Blankfein and other Goldman executives can't sell or transfer their shares until 2016.

"It looks like they're shooting for a more steady compensation system," said Steve Cross, managing partner at Cogent Compensation Partners, a Houston executive-pay consulting firm. That replaces the "higher-risk, higher-reward" system long entrenched at securities firms before the crisis erupted.

Goldman didn't indicate why it decided to increase the base salary for Mr. Blankfein and four other top executives whose pay details were disclosed in filings Friday. A Goldman spokesman declined to comment or to specify the new base salary for all Goldman partners.

Goldman Boosts Pay of Partners

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Goldman Boosts Base Salaries of Partners - WSJ.com

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Deal Journal Lloyd Blankfein: Goldman Sachs's $13.2 Million Man

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Before now, partners at Goldman got a base salary of $600,000. Beyond the base pay, partners get a share of the company's profits. Most of a partner's overall compensation is in the form of company stock.

Goldman said the 2011 base salary for President Gary D. Cohn, Vice Chairmen John S. Weinberg and J. Michael Evans, and Chief Financial Officer David Viniar will increase to $1.85 million from $600,000.

Each of the four executives also was granted a $12.6 million restricted stock bonus for 2010, up from $9 million a year earlier, according to securities filings Friday.

The base-salary jumps follow one of the most challenging years in Goldman's 142-year history. Profits fell 38%, while net revenue declined 13%. Total compensation and benefits fell 5% to $15.38 billion in 2010 from $16.19 billion a year earlier. Goldman set aside 39% of revenue to pay employees, the second-lowest percentage since it became a public company.

Separately, American Express Co. said Chairman and CEO Kenneth I. Chenault sold about $7.5 million in shares of the credit-card issuer partly because of a "change in compensation mix" by the New York company.

In a securities filing, AmEx said the compensation committee of its board decided this past week to "pay the significant majority" of Mr. Chenault's incentive compensation and "portfolio grant payouts" as restricted shares.

AmEx previously made the payments "primarily in cash." The change is aimed at tying executive compensation "more closely to long-term" performance, the company said.

—Aaron Lucchetti contributed to this article.

Write to Liz Rappaport at [email protected]