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Goldman Sachs Group has given its chairman and chief executive Lloyd Blankfein a US$53.4 million ($76.4 million) annual bonus, setting a new record for Wall Street's top brass less than a week after Morgan Stanley paid John Mack US$40 million.
Goldman gave Blankfein, 52, US$27.3 million in cash and US$15.7 million in restricted stock. He also received options to buy Goldman shares that the firm valued at almost US$10.5 million, according to a filing with the US Securities and Exchange Commission.
Goldman awarded US$150 million in bonuses to 11 other executives, including US$25.7 million each to co-presidents Gary Cohn, 46, and Jon Winkelried, 47.
Blankfein, who took over as CEO from Henry Paulson in June, led Goldman to US$9.54 billion in net income this financial year, the fattest profit in the history of the securities industry. Even as Wall Street enjoyed its best year, none of Goldman's rivals approached its earnings growth or the 58 per cent gain in its shares.
"If you look at the price of Goldman Sachs stock over the last year or so, I think most of the shareholders would have no problem paying that bonus," said Eric Barden, chief investment officer of Texas-based Barden Capital Management, which holds Goldman shares. "What Goldman Sachs has done over the last generation or so has really reshaped the entire financial-markets industry."
Blankfein, who joined Goldman as a metals salesman in 1982, received US$38 million in pay last year, almost as much as Paulson. His compensation last year included a US$600,000 salary, US$10.8 million in restricted stock, a cash bonus of $19 million and stock options valued at US$7.2 million.
Goldman spokesman Lucas van Praag said Blankfein's salary remained at US$600,000 this year.
In March Goldman shareholders eliminated a US$35 million cap on bonuses in cash and restricted stock. They also passed a new compensation plan for Goldman's top 25 executives that set the maximum bonus at 0.6 per cent of pre-tax profit. This year, that amounts to US$87.4 million each.
Blankfein didn't follow the tradition Paulson, 60, established as a Goldman CEO by taking all of his bonuses for the past three years in company stock. Blankfein also received some of his bonuses in cash.
This year, Goldman shares posted their biggest annual gain since the firm's 1999 initial public offering and the best performance in the 12-member Amex Securities Broker/Dealer Index.
Net income surged 70 per cent, reaching US$19.69 per share. Revenue also set a Wall Street record, climbing 49 per cent to US$37.7 billion.
The five biggest US securities firms - Goldman, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns - are handing out about US$36 billion of bonuses this year. Goldman set aside as much to pay its 26,467 employees, US$16.5 billion, as it generated in revenue in 2000.
In New York City, securities industry employees would receive US$23.9 billion in bonuses this year, a state official said. That worked out to an average US$137,580. Goldman's total pay averaged US$622,000 a person.
- BLOOMBERG
