Despite the drop recorded in fixed income trading business in
The Goldman Sachs Group, Inc.
) Chief Executive Officer (CEO) Mr. Lloyd C. Blankfein has been
awarded restricted stock worth $14.7 million for 2013, as per the
latest SEC filing by the bank. This reflects a year-over-year
rise of around 11% in stock awards. Notably, Blankfein's total
package will include 88,422 restricted stock units.
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Following the rise in the CEO's stock awards, shares of Goldman
waned 1.04%, implying that the market has not positively reacted
to the news, as the CEO might have failed to meet investors'
Usually, Goldman awards approximately 70% as stock options to
senior executives. Therefore, the cash bonus is estimated to be
$6.3 million for Blankfein, though it is yet to be disclosed.
Collectively, including base salary of $2 million, Blankfein's
total pay package might come in at around $23 million for 2013,
reflecting a 9.5% hike on a year-over-year basis. Notably, this
excludes estimated long-term incentives, which are expected to be
disclosed later in 2013.
With this increment, Blankfein's pay package will surpass that of
the CEOs of banking majors
JPMorgan Chase & Co.
). JPMorgan's chief Jamie Dimon has received a 74% hike in pay,
which totaled $20 million in 2013, while Morgan Stanley's chief
James Gorman has been conferred with stock bonus of $4.9 million
in 2013, up 88% year over year. However, among other major banks,
Bank of America Corporation
) and Wells Fargo & Company are yet to disclose their CEO's
The hike, as believed, is well deserved keeping in mind
Blankfein's contribution to Goldman, when he took over the reins
of the company in 2006. He has been instrumental in almost
doubling full-year 2012 net profits to $7.5 billion from 2011 and
further increasing it 8% to $8 billion in 2013.
Moreover, Goldman's total costs for employee compensation and
benefits waned 3% to $12.6 million in 2013. The bank's shares
also rose a whopping 36.4% in 2013.
Blankfein has also been adept in strategically evaluating the
various facets of Goldman's major businesses. Besides announcing
numerous cost cutting initiatives and divestment of non-core
units, the CEO has single-handedly revived profitability at
Goldman by handling several legal settlements.
We believe Blankfein's pay hike will prove to be a major morale
booster. Even though Goldman's fundamentals remain highly
promising with a diverse business model and a strong balance
sheet, regulatory issues, including lawsuits and the fundamental
pressures on the banking sector are anticipated to pose as
headwinds to profitability.
Yet, we consider Goldman to be a value investment due to its
steady dividend-yielding nature, well-managed global franchise
and healthy capital base.
Goldman currently carries a Zacks Rank #2 (Buy).