Goldman Sachs Group, Inc. awarded its chief executive officer, Llyod Blankfein a compensation package of $23 million in salary and bonuses for 2013. This definitely is a large compensation package that some might question that he deserved such a generous package. Mr. Blankfein's compensation package is on par with other CEOs compensation in the investment banking firm. James Dimon, the CEO at Morgan Stanley was awarded a compensation package of $20 million in 2013. Both CEOs received compensation packages that increased from their 2012 earnings because their firms each saw over a 33% increase in their share price and beat the S&P 500 index.
The risk he takes as a CEO of the largest investment banking firm in the United States should be compensation with an income level in accordance. If we go through income determinants, he must meet and exceed expectations. He must have exceptional talent and ability as evidenced through Goldman's revenues of $34.2 billion and a net income increase 8% from 2012. So, when revenues of that amount are generated, Mr. Blankfein does deserve his compensation. In fact, his earnings for 2013 account for less than 1% of the total earnings for Goldman Sachs Group, Inc. Mr. Blankfein's acquired skills and effort can be seen as he steered the firm through the pitfalls of the financial crisis by steadily rebuilding relationships with investors and government regulators.
A private managing director of a New-York based compensation-consulting firm Johnson Associates, Alan Johnson, said that Mr. Blankfein's compensation is on par with how Goldman Sachs Group, Inc. performed. I believe his compensation is warranted and as a young adult interested in corporate management, it is encouraging to see top level executives compensated fairly.
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2 comments:
As everyone said and known, the capital market in 2012 has been up up and up thanks to the quantitative easing policy. It is true that Goldman Sachs has done very well, but everyone has done well. Thus, the question is how much is the contribution of the CEO in that soar? Did he really deserve that compensation ? (I feel like executive compensation has been inflated through years just like how grade has been inflated in school system :D)
After the financial crisis, the government saw it fit to increase regulation of the industry. Some of the regulation put an end to some of the most profitable securities and activities that many financial firms were involved in. As a result, there was more increased pressure on these firms to maintain growing profits and find more innovative ways to make money. Most of this pressure lay on the CEO and on other top executives to steer idea creation and development. James Dimon is an good example of the above, as JP Morgan came out of the crisis the least harmed of the big banks. Recently however, JP Morgan has been hit by tough legal payouts. I wonder what Dimon's compensation would have been without that expense?
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