Goldman Awards Blankfein a Record $67.9 Million Bonus for 2007
Dec. 21 (Bloomberg) -- Goldman Sachs Group Inc., the world's biggest securities firm, awarded Chief Executive Officer Lloyd Blankfein $67.9 million in cash, restricted stock and options for 2007, topping last year's record-setting $53.4 million.
Blankfein, 53, will receive $26.8 million in cash, 112,675 restricted stock units and 322,104 options, the New York-based firm said today in a filing with the U.S. Securities and Exchange Commission.
Goldman shattered Wall Street profit records for the fourth-consecutive year even as rivals such as Morgan Stanley and Merrill Lynch & Co. suffered mortgage-related losses. Goldman set aside $20.2 billion to pay employee salaries, benefits and bonuses, 23 percent more than last year.
``There are successful people and then there's extraordinary success, and they're trying to show as a firm that they're really extraordinary,'' said Jeanne Branthover, managing director of Boyden World Corp., an executive recruiter in New York. ``They're rewarding him for leading such a fabulously successful ship.''
Blankfein's pay, up 27 percent from 2006, contrasts with peers at Morgan Stanley and Bear Stearns Cos. who gave up year- end bonuses after posting losses related to subprime mortgages.
Morgan Stanley CEO John Mack and Bear Stearns CEO James ``Jimmy'' Cayne, who each received $40 million last year, aren't taking any bonuses after reporting the first-ever quarterly losses in the firms' history.
Lehman Brothers Holdings Inc., which reported a 5 percent increase in 2007 net income, boosted CEO Richard Fuld's year-end stock bonus by 4 percent to $35 million this year.
Metals Salesman
Last year, Goldman gave Blankfein $27.3 million in cash, $15.7 million in restricted stock and options to buy shares that the firm valued at almost $10.5 million at the time. Added to his $600,000 salary, he made a total of $54 million. Blankfein's salary is unchanged this year.
``Goldman Sachs are just in a league in their own, they're an outlier when it comes to compensation,'' said Henry Higdon, managing partner of recruiting firm Higdon Partners LLC in New York.
Blankfein, a Harvard-educated lawyer who grew up in Brooklyn and joined Goldman as a metals salesman in 1982, took over as CEO from Henry Paulson last year. Paulson, now U.S. Treasury secretary, took his bonus in stock during each of the last three years he headed the firm. By contrast, Blankfein has taken some of his bonuses in cash.
Goldman rose $6.93, or 3.4 percent, to $209.60 at 4:05 p.m. in New York Stock Exchange composite trading. The stock has risen 5.1 percent this year, compared with a 23 percent decline in the 12-member Amex Securities Broker/Dealer Index.
BLOOMBERG
Economy | Business | Social | Leaked | Opinions
Saturday, December 22, 2007
Banks Drop Treasury-Backed Plan to Bail Out SIVs
Banks Drop Treasury-Backed Plan to Bail Out SIVs
Dec. 21 (Bloomberg) -- Citigroup Inc., Bank of America Corp., and JPMorgan Chase & Co. abandoned a U.S. Treasury- sponsored plan to buy assets from cash-strapped structured investment vehicles.
The ``SuperSiv'' fund brokered by Treasury Secretary Henry Paulson, slated to be about $80 billion when it was announced in October, ``is not needed at this time,'' the banks said in a statement today.
The need for a bailout has diminished as HSBC Holdings Plc, bond insurer MBIA Inc. and other companies that manage SIVs arranged their own rescues. The steps lessened the threat that SIVs will dump their holdings and further roil credit markets contaminated by losses in securities tied to subprime mortgages. New York-based Citigroup said last week it would guarantee $58 billion in debt from SIVs it manages in order to avoid a forced sale of the assets.
``The market is in surgery and they can't even get the Band- Aids to work,'' said Thomas Flaherty, who manages $25 billion in corporate debt at Aberdeen Asset Management in Philadelphia.
More than 20 banks, SIVs and investment managers participated in the discussion with BlackRock Inc. serving as the adviser, the statement said. The banks could revive the plan if needed.
`A Better Position'
SIVs reduced their holdings to less than $265 billion from $340 billion during the summer, the banks said in the statement. The assets are expected to continue to decline.
``The private sector participants always indicated that this vehicle was designed to complement other market solutions,'' Jennifer Zuccarelli, spokeswoman for the Treasury Department, said today in a statement. ``The department appreciates the efforts of the financial professionals.''
Citigroup took $49 billion in SIV assets onto its balance sheet, following decisions by banks, including HSBC and WestLB AG, to take on the assets of SIVs or provide financing to ones they manage.
``It basically means the bank is going to stand behind those SIVs, which is probably a better position for any investor than having it come under an umbrella super fund which is then going to eat up some of the asset value on fees,'' said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts, on Bloomberg TV.
Moody's earlier this month said it was considering whether to cut the ratings on $105 billion of debt sold by SIVs, which were set up to make money by borrowing in the commercial paper and medium-term note markets and buying longer-maturity, higher- yielding assets such as bank notes and mortgage bonds.
Shunning the Debt
Investors started shunning the debt or demanding yields that would have been prohibitive for the SIVs after learning that some of the companies bought securities tied to subprime home loans, or mortgages for people with poor credit.
SIVs emerged in August as one of the biggest threats to capital markets that were rocked by record-high defaults on subprime mortgages. Citigroup invented SIVs in 1988 and was the biggest manager of the funds.
The average net asset values of SIVs tumbled to 55 percent from 71 percent a month ago and 102 percent in June, according to Moody's. The net asset value is the amount that would be left for investors if a fund had to sell holdings and repay debt.
BLOOMBERG
Dec. 21 (Bloomberg) -- Citigroup Inc., Bank of America Corp., and JPMorgan Chase & Co. abandoned a U.S. Treasury- sponsored plan to buy assets from cash-strapped structured investment vehicles.
The ``SuperSiv'' fund brokered by Treasury Secretary Henry Paulson, slated to be about $80 billion when it was announced in October, ``is not needed at this time,'' the banks said in a statement today.
The need for a bailout has diminished as HSBC Holdings Plc, bond insurer MBIA Inc. and other companies that manage SIVs arranged their own rescues. The steps lessened the threat that SIVs will dump their holdings and further roil credit markets contaminated by losses in securities tied to subprime mortgages. New York-based Citigroup said last week it would guarantee $58 billion in debt from SIVs it manages in order to avoid a forced sale of the assets.
``The market is in surgery and they can't even get the Band- Aids to work,'' said Thomas Flaherty, who manages $25 billion in corporate debt at Aberdeen Asset Management in Philadelphia.
More than 20 banks, SIVs and investment managers participated in the discussion with BlackRock Inc. serving as the adviser, the statement said. The banks could revive the plan if needed.
`A Better Position'
SIVs reduced their holdings to less than $265 billion from $340 billion during the summer, the banks said in the statement. The assets are expected to continue to decline.
``The private sector participants always indicated that this vehicle was designed to complement other market solutions,'' Jennifer Zuccarelli, spokeswoman for the Treasury Department, said today in a statement. ``The department appreciates the efforts of the financial professionals.''
Citigroup took $49 billion in SIV assets onto its balance sheet, following decisions by banks, including HSBC and WestLB AG, to take on the assets of SIVs or provide financing to ones they manage.
``It basically means the bank is going to stand behind those SIVs, which is probably a better position for any investor than having it come under an umbrella super fund which is then going to eat up some of the asset value on fees,'' said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts, on Bloomberg TV.
Moody's earlier this month said it was considering whether to cut the ratings on $105 billion of debt sold by SIVs, which were set up to make money by borrowing in the commercial paper and medium-term note markets and buying longer-maturity, higher- yielding assets such as bank notes and mortgage bonds.
Shunning the Debt
Investors started shunning the debt or demanding yields that would have been prohibitive for the SIVs after learning that some of the companies bought securities tied to subprime home loans, or mortgages for people with poor credit.
SIVs emerged in August as one of the biggest threats to capital markets that were rocked by record-high defaults on subprime mortgages. Citigroup invented SIVs in 1988 and was the biggest manager of the funds.
The average net asset values of SIVs tumbled to 55 percent from 71 percent a month ago and 102 percent in June, according to Moody's. The net asset value is the amount that would be left for investors if a fund had to sell holdings and repay debt.
BLOOMBERG
Subscribe to:
Posts (Atom)