Goldman Sachs Group Inc.’s (GS) Chairman and Chief Executive Officer (CEO) Mr. Lloyd C. Blankfein’s total compensation, including a cash bonus, had been raised to $19 million in 2010, according to a regulatory filing on Friday.
Blankfein’s pay package includes salary of $600,000, a cash bonus of $5.4 million and stock awards of $7.65 million for 2010. He has also received $464,067 worth other benefits, including $185,110 for the car, $62,020 for medical and dental coverage and the remaining for life insurance, tax planning and retirement contributions.
Furthermore, the CEO was granted $12.6 million worth restricted stock compared to $9 million in 2009. The value of restricted stocks was excluded from the total annual package as the encashment of this award will take a period of three years.
Since the financial crisis in 2008, Goldman has granted a cash bonus to its CEO for the first time. Regulatory filings stated that Mr. Blankfein also received an additional $27.2 million in 2010 from investments in funds managed by Goldman. Blankfein and eight deputies garnered a total of $125 million during 2010 from their investments in private equity and hedge funds managed by Goldman.
Furthermore, along with CEO, president, chief financial officer and two vice chairmen also received a base salary of $600,000, bonus of $5.4 million, stock grants worth $7.65 million and several other perks.
In January, Goldman revealed that Blankfein’s salary will increase to $2 million and four other executives’ pay will increase to $1.85 million in 2011.
However, Bank of America Corporation’s (BAC) CEO Brian T. Moynihan’s compensation in 2010 had been lowered to $1.94 million. Though the CEO’s salary was hiked to $950,000 from $800,000, the stock awards declined to zero from $5.2 million in 2009.
According to the filing, under a long-term incentive plan, Goldman’s executives are expected to earn more bonuses in the upcoming years reliant on two financial measures: return on equity (ROE) and book value per share (BVPS).
Initially, the board will consider three years, but that can be extended to the end of 2018. The speculative value of the award for all five executives was $7 million.
The performance based bonus would be given only when Goldman’s ROE comes to 10% and BVPS climbs an average of 7%. Additionally, these executives will receive 150% of the bonus if the average ROE is 15% or more and BVPS inched up an average of 12% or more.
Among its peers, Goldman has been known for giving highest pay to CEO. Blankfein was being paid $42.9 million in 2008, which dropped down to $1.03 million in 2009, after the financial crisis began.
Though Goldman raised compensation for CEO in 2010, its net income fell 37% to $7.71 billion in the year driven by sharp declines in its bond trading and investment banking businesses. Furthermore, revenue also plummeted 13% to $39.16 billion.
Last month, Goldman received regulators’ permission to pay back $5 billion to Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) for investment made at the peak of the financial crisis in 2008. Goldman also got approval for its capital spending plan for 2011 from the Federal Reserve, including the repurchase of common stock and a possible hike in the quarterly dividend.
Fundamentally, we expect Goldman to benefit from its well managed global franchise, strong capital base and industry leading position in trading and asset management. Though the company recorded lower equity trading and overall revenue decline in the last quarter, its prudent business model and strong fundamentals will likely deliver better earnings in the upcoming quarters.
Goldman currently retains its Zacks #3 Rank, which translates into a short-term Hold rating. Also, considering the fundamentals, we maintain a long-term Neutral recommendation on the stock. Goldman’s closest competitor – Morgan Stanley (MS), retains a Zacks #3 Rank (a short-term Hold rating).
BANK OF AMER CP (BAC): Free Stock Analysis Report
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