Goldman cuts Blankfein's bonus to $9m

02/06/2010 (1 d 20 h ago)

• Mundane sum by Wall Street standards compares with $69m payout two years ago • JP Morgan inherits mantle as highest-paying bank Wall Street bank Goldman Sachs has sought to defuse outrage over pay at the top echelons of the industry by handing its chief executive, Lloyd Blankfein, a far lower than expected bonus of $9m (£5.8m) for a year in which it bounced back from financial crisis to make record profits. Although an enormous payout in any other walk of life, $9m is a relatively mundane bonus by Wall Street's standards, and is a paltry amount in terms of Goldman's history. Two years ago, Blankfein scooped a record breaking $69m, and some reports earlier this week had suggested that he might get as much as $100m for 2009. The bonus, revealed late on Friday in a document filed with US regulators, means Goldman is no longer the top paying bank on Wall Street. Rival firm JP Morgan Chase disclosed that its chief executive, Jamie Dimon, would receive $17m after keeping his firm profitable throughout the ­financial crisis. Critics of Wall Street in political and union circles had been keenly waiting to see how Goldman would handle an outpouring of public anger over huge bonus payouts in an era of high unemployment and ongoing difficulty for small businesses seeking bank loans on the high street. A Goldman spokesman said: "The firm produced very good results for 2009, but the environment is very difficult and the board was mindful of that difficult ­environment in making decisions about executive compensation." Blankfein, a 55-year-old former gold trader from the Bronx, has led Goldman since 2006 and has become a lightning rod for anger over Wall Street pay. His firm has been picketed by union activists and has been attacked for selling toxic mortgage-related securities to its clients while at the same time using its own capital to take trading positions betting on the collapse of the housing market. Under fire, Blankfein apologised in November for Goldman's involvement in "things that were clearly wrong". But he irritated critics the same month by remarking that his staff were doing "God's work" – a comment subsequently characterised by his public relations advisers as an attempt at humour. After announcing profits of $13.4bn last month, Goldman tried to improve its image by making a $500m donation to charity. Senior colleagues of Blankfein, including its chief financial officer, David Viniar, and chief operating officer, Gary Cohn, will also receive $9m. The bonuses are being paid in reserved stock units, rather than cash, and cannot be sold until 2015, in an effort to encourage a long-term outlook. In a reaction to Alistair Darling's special tax on bonuses, staff at Goldman's offices in London have had their bonuses capped by the bank at £1m. Pay experts expressed surprise at the sums. Alan Johnson, a Wall Street remuneration consultant, said he had expected the payouts to be far higher: "This just shows what public pressure can do." He said the figures created a curious anomaly in which Goldman's senior executives earned less than star traders lower down the ranks: "This isn't sustainable long term because you've got people two or three levels lower taking home more." Although less profitable than Goldman, JP Morgan has emerged from the credit crunch as a competing powerhouse. It had sufficient financial strength to salvage the remnants of two collapsing competitors – the Wall Street brokerage Bear Stearns and the Seattle-based high street bank Washington Mutual. JP Morgan's chief executive is ­getting $8m in stock, a further $8m in share options and a salary of $1m. A politically astute operator, Dimon, 53, has close links with the White House but has been a staunch defender of Wall Street's ways. He told the US financial crisis inquiry commission last month that although there have been "quite legitimate" concerns over banking pay, JP Morgan was not guilty: "I believe our compensation policies have been and remain appropriate." Executive pay and bonuses Goldman Sachs JP Morgan Banking United States Andrew Clark guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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