Lloyd Blankfein's pay is saying something about Goldman Sachs
Lloyd Blankfein is being paid less than Jamie Dimon. He is also, probably, going to be paid less than Richard Handler (at Jefferies).
It emerged on Friday that Lloyd will receive a bonus of $9m for 2009. Jamie Dimon will receive $17m in stock and options, plus a $1m salary. Richard Handler is expected to receive $12m.
The only person who appears to be earning less than Lloyd for last year in Wall Street CEO circles is James Gorman of Morgan Stanley, who's reportedly receiving $9m in deferred compensation, despite only becoming CEO in January 2010.
If the ignominy of being paid less isn't sufficient to make Blankfein scowl, he's also obliged to wait longer to access his pay.
Dimon's restricted stock begins vesting in 2012, and his stock options can be exercised from 2011. Gorman's stock will vest over the next three years. Although Blankfein will be able to convert his bonus into shares next year, he'll have to wait until 2015 to sell any of them.
The modesty of Blankfein's bonus is most clearly illustrated in comparison to 2007, when he received $67.9m. While Lloyd is being paid 85% less than that this year, Jamie's pay is down 'only' 50% on what he received at the peak of the market.
Performance can't be blamed. The paucity of LB's bonus is despite a 100% increase in the price of Goldman stock last year; JP Morgan's stock rose a mere 32% by comparison.
Along with the decision to restrict UK partner compensation to 1m this year and to pay negative compensation in the fourth quarter, Goldman's relative frugality therefore underlines the extent to which pay has become a key PR issue for the bank. The fact is, that even if Goldman wanted to pay its top people well, it can't.
As Felix Salmon points out, pay restraint at the top makes it difficult for anyone else at Goldman to whinge about being underpaid. Equally, it suggests Goldman could be coming to a realization that it doesn't need to pay unfeasibly well to keep people.
This may not be the case however. Headhunters in London say they're now targeting Goldman's disaffected partners. And last week, both Morgan Stanley and BofA Merrill Lynch announced they'd hired senior Goldman staff to build their businesses.
Goldman may get away with paying badly this year. Whether its senior people will stick around for multiple years of bad pay is another question.
