Goldman Sacks takes long view over pay-outs

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Goldman Sachs (NYSE:GS) adopted a provision in its executive
compensation scheme that will reward top officers based on their ability
to meet long-term performance goals without encouraging “imprudent
risk-taking”.

Goldman’s board approved the so-called long-term performance
incentive plan on December 17 as Wall Street prepared for another season
of multimillion-dollar bonuses and a possible fresh wave of
condemnation of its pay practices.

The change comes amid expectations that regulators will soon impose
guidelines that tie a larger portion of bank executive pay to corporate
performance and risk management.

Activist investors have encouraged many large companies to adopt
similar incentive plans, arguing that the schemes offer shareholders a
more transparent view of executive pay.

Goldman’s policies grant it the ability to defer some employees’ pay
and “claw back” awards. But the new plan would disclose specific goals
its participants would have to meet.

In a filing with the Securities and Exchange Commission, Goldman said
on Thursday that the performance-based awards “may be granted from time
to time to key employees”.

The bank did not say if it would use the new program as part of this
year’s pay plans, and which officers would be eligible for it.

“The long-term incentive plan is a tool the compensation committee
may use to further align incentive compensation with long-term
performance in a manner that does not encourage imprudent risk-taking,” a
Goldman spokesman said.

In its filing, the bank said its chief risk officer would review the key terms of any awards.

Wall Street’s decisions to pay multimillion-dollar awards not long
after the financial crisis prompted a backlash. Goldman paid its chief
executive, Lloyd Blankfein, a US$9M stock bonus for the bank’s Y 2009
performance. 2 yrs earlier, Mr Blankfein received US$68M in cash, stock
and options.—Paul A. Ebeling, Jnr. www.livetradingnews.com