Goldman Sachs’s $69 Million Man

Blankfein Sets Record
For a CEO’s Payday,
Dwarfs Others on Street

By KATE KELLY and RANDALL SMITH
December 22, 2007

Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein received about $69 million in compensation this year, the largest payday ever for the head of a Wall Street firm and a far cry from many of his rivals, some of whom are forgoing their bonuses in acknowledgment of a devastating year.

Mr. Blankfein’s compensation, which was revealed late Friday in a regulatory filing, encompasses $26.8 million in cash and $41.1 million in stock and options awards.

In addition, the 53-year-old chief took home a base salary of $600,000, and donated an additional $200,000 of his pay to the firm’s newly formed charitable organization, Goldman Sachs Gives.

Rivals Cut Back

That bonus dwarfs the pay being pocketed by at least two rivals: John Mack, chief executive of Morgan Stanley, and James Cayne, CEO of Bear Stearns Cos. Both those firms this week reported larger-than-expected losses for the fourth quarter, putting the onus on their CEOs to share some of the financial pain from a wrenching period on the Street. As a result, Mr. Cayne is expected to take home his base salary of $250,000 and Mr. Mack, his base of $800,000.

Messrs. Mack and Cayne aren’t the worst off, however. This fall, faced with multibillion-dollar write-downs from bad investments in complex mortgage-backed securities at both their firms, Merrill Lynch & Co. CEO Stan O’Neal and Citigroup Inc. CEO Charles Prince were forced out of their jobs altogether. Merrill’s former head is set to receive accumulated benefits of about $161.5 million, but will receive no pay for fiscal 2007. Mr. Prince will receive $29.5 million in stock awards and retirement pay, according to filings, and is slated to receive a bonus of $10 million or more, depending on Citigroup’s stock price at year’s end.

Goldman didn’t disclose total annual compensation for Co-Presidents Gary Cohn and Jon Winkelried. But in separate filings Friday, the firm reported that each executive received restricted stock amounting to $23.6 million, plus options packages valued at $16.2 million. Those levels were 53% higher and 57% higher than stock and options granted last year.

Pay for Performance?

Some analysts think this year’s payouts are proof that the Street’s merit-driven system of compensation still works. “In terms of the kind of incentive structures set up at these investment banks, where the base [salary] is extraordinarily low, it does in a sense align incentives to a certain extent, with those of shareholders,” says Henry Hu, a professor of corporate and securities law at the University of Texas Law School in Austin.

Disclosed stock grants were smaller for some senior executives at Morgan Stanley, where 2007 profits fell 57% to $3.21 billion after a big mortgage write-down. However, the amounts aren’t exactly comparable because this year executives can choose another program for some of their pay, and Morgan Stanley has said firmwide pay will actually rise by 18%.

Stock grants, which last year equaled 65% of compensation for top Morgan Stanley executives, declined for the firm’s co-presidents. A year ago, co-Presidents Zoe Cruz and Robert Scully received $19.2 million and $12.8 million, respectively, in stock and option grants. This year, Co-Presidents, Walid Chammah and James Gorman, received $8.9 million and $8 million in stock, respectively.

Write to Kate Kelly at kate.kelly@wsj.com and Randall Smith at randall.smith@wsj.com

http://online.wsj.com/article/SB119828282710146105.html?mod=fpa_whatsnews 

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