Goldman Execs To Get $111 Million In Delayed Bonus Payoffs Next Month

Tyler Durden's picture

For those who are concerned that the head executives of the bank that does god's work, and has repeatedly claimed it did not need taxpayer bailouts even though it borrowed from the Fed's Primary Dealer Credit Facility not once (that would be explainable), not twice (also), but 84 times, worry not: Bloomberg reports that in January, Lloyd Blankfein and his top deputies will receive $111.3 million in stock in a "payoff from last year and their record-setting 2007 bonuses." Specifically, Lloyd will get $24.3 million, $24 million will go to President Gary Cohn, $21.3 million to CFO David Viniar, $20.8 million to Jon Winkelried, and $14.3 million to Edward Frost, former co-head of investment management. And as Bloomberg reports: "The payouts, just a portion of the $67.9 million bonus awarded to Blankfein for 2007 and the $66.9 million paid to Cohn, reflect a 24 percent decline in the stock’s value since it was granted at $218.86." To be sure, this money was well-earned: "Within a year after the bonuses were approved, Goldman Sachs took $10 billion from the U.S. Treasury, converted to a bank and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs. This year the firm paid $550 million to settle U.S. regulators’ fraud charges related to a mortgage-security the company sold in 2007." Luckily, the violent images in the prior clip are from Athens, and not south Manhattan: after all Americans have so much to be grateful to their bankers for: for one, there are least 10% of the benefits in the recent tax extension left that have not been consumed by the recent spike in oil prices.

And some more facts that will most certainly not get anyone's blood boiling:

JPMorgan Chase & Co. CEO Jamie Dimon, 54, is set to receive $6.8 million worth of shares next month that were awarded for 2007. John Mack, 66, who served as CEO of New York-based Morgan Stanley until this year, didn’t take a bonus in 2007, 2008 or 2009. He will receive about $5.4 million of previously vested shares in January that Morgan Stanley awarded him for 2005.

Of the $111.3 million in restricted stock awards due to be doled out in January, $94.9 million was from 2007 grants, the filings show. While Vice Chairmen John S. Weinberg and J. Michael Evans will each receive $3.3 million from their 2009 bonus grants, their 2007 awards weren’t published in the proxy.

The executives will be restrained from cashing in the stock they receive. Blankfein, Cohn, Winkelried and Viniar were all required to keep 90 percent of their shares under an agreement reached with Berkshire Hathaway Inc., the company controlled by billionaire Warren Buffett, when it bought $5 billion of the firm’s preferred stock in 2008. That limit expires when Buffett’s investment is repaid or on Oct. 1, 2011, whichever comes soonest.

Even before the Buffett restrictions were imposed, Goldman Sachs’s CEO, CFO, presidents and vice chairmen were required to keep at least 75 percent of the shares they had received since becoming senior executive officers, with the exception of shares received in Goldman Sachs’s 1999 initial public offering or through any acquisition by Goldman Sachs. Morgan Stanley and JPMorgan also require top executives to retain 75 percent of the shares they are awarded.

And the kicker: this is fair money earned based on performance targets.

About 88 percent of the 2007 awards were restricted stock units the firm granted for performance, which were vested at that time. The executives receive the shares underlying those units in January 2011. The remaining 12 percent are shares the executives purchased at a 25 percent discount using their 2007 cash bonuses. Those shares are either delivered or have restrictions lifted next month.

And since these gentlemen are about to be paid bonuses on short-term performance, we are confident they will be claw-backed all their stock-based bonuses since the beginning of their careers at Goldman, as their bonus (not to mention net worth) would be zero based on the banks' performance in 2008, had the taxpaying public not stepped in and bailed each and every one of them.

As for what the popular reaction will be to this news...

“The public will be outraged,” she said. “Wall Streeters will be excited that there’s still money being made on Wall Street, and there’s still a reason to be working so hard.”

Whoever said hard work (aka infinite moral hazard, and a perpetual taxpayer bailout fallback) does not pay off...