| NEW YORK
NEW YORK Goldman Sachs Group (GS.N) tripled Chief Executive Lloyd Blankfein's base salary and awarded him $12.6 million (7.9 million pounds) of stock, even after the bank's net income plunged last year.
Blankfein is receiving base pay of $2 million effective Jan 1, up from $600,000, he company said in a filing.
The shares awarded to Blankfein amount to a 42 percent increase from the all-stock bonus he received for 2009, and are the latest sign that U.S. banks are moving away from some of the austerities imposed by the financial crisis.
Legislators, regulators, and others pressed banks to reduce bonuses for 2009, soon after the financial system was rescued by more than a trillion dollars of support from the U.S. government. Many critics complained that banks privatise their profits and socialize their losses. Big bonuses paid for 2009 would have intensified public outrage.
Blankfein's 2009 bonus was worth $8.9 million when awarded in February 2010, far below the $67.9 million that he received for 2007.
Public outrage over Wall Street pay seems to be receding, and bonuses for the top executives for 2010 are likely to head higher, analysts have said.
Citigroup Inc (C.N) Chief Executive Vikram Pandit, who had pledged to take a $1 salary until the bank returned to sustained profitability, last week got a $1,749,999 raise just days after the bank reported its first full-year profit since 2007.
Blankfein's pay increase came even after the bank's profit fell 38 percent in 2010 to $8.35 billion.
Goldman also raised the salaries of Chief Financial Officer David Viniar and Chief Operating Officer Gary Cohn to $1.85 million, a filing said. All three executives previously earned a base salary of $600,000, according to filings.
RAISES ALL AROUND
Blankfein will also receive 78,111 restricted stock units, worth $12.6 million by the share price on Friday. The units will convert to stock over the next three years but Blankfein will not be able to sell them until January 2016, according to a filing.
The Goldman CEO also receives payouts from his investments in funds that are managed by the bank. In 2009, he received about $18.7 million in distributions from investment funds open to employees of the firm.
Boosting base salaries has become common across Wall Street. Salaries used to be relatively low, a throwback to when the biggest banks were partnerships that sought to keep costs low during the year. At the end of the year, profits were paid back to partners, as dividends, in what later morphed into bonuses.
Now firms are hoping that higher base salaries will allow employees to cover daily expenses with their regular paychecks. The flip side of that is that banks are paying smaller bonuses to many employees, to discourage them from taking huge risks that can generate big paydays but also put the firm at risk.
"A $600,000 salary is low for an CEO of a public company, and lifting the base salary is logical and consistent with what is happening elsewhere," said Rose Marie Orens, a compensation consultant at Compensation Advisory Partners.
Banks are also deferring more compensation, to ensure that employees have similar incentives to shareholders. Morgan Stanley is now deferring more than 80 percent of senior executives' compensation on average, up from 75 percent in 2009, the bank said last week.
Median total compensation for big public company CEOs was $7.5 million in 2009, according to Equilar, while median U.S. household income is closer to about $50,000.
Blankfein's 2010 pay was dwarfed by John Paulson, a hedge fund manager who earned an estimated $5 billion in 2010.
"It's quite possible that Blankfein got paid something in the same ballpark as Paulson's secretary," said James Ellman, president at hedge fund manager Seacliff Capital.
(Reporting by Elinor Comlay. Editing by Robert MacMillan, Bernard Orr)