Goldman Pays $53 Million Each to Cohn, Winkelried

Goldman Sachs Group Inc., the most profitable securities firm in history, paid $53 million each to Gary Cohn and Jon Winkelried in their first year as co- presidents, or about half a day's revenue.

Cohn, 46, and Winkelried, 47, both received cash bonuses of $26.7 million, $15.4 million in restricted stock, options that the firm estimates are worth $10.3 million and $600,000 in salary, New York-based Goldman said today in a proxy filing with the U.S. Securities and Exchange Commission.

Goldman set a new all-time high for Wall Street compensation in December when it granted Chairman and Chief Executive Officer Lloyd Blankfein $54 million for 2006, topping the prior year's record $38.3 million pay to Henry Paulson, Blankfein's predecessor. Goldman's 70 percent jump in profit and 56 percent share price gain led last year's unprecedented securities industry earnings.

``It's a reflection of the hottest markets we've seen in a long, long time,'' said Henry Higdon, who runs New York-based executive recruitment company Higdon Partners LLC. ``They allocate their capital to their most precious resource, which is their top talent, and it would appear that they're getting an excellent return.''

Goldman Funds

In addition to their salary and bonuses, Goldman's top executives also made money on their investments in private equity, venture capital and hedge funds managed by Goldman Sachs. Blankfein's profit for the year totaled $9.8 million, the proxy shows. Cohn made $4.9 million, Winkelried $621,270, and Chief Financial Officer David Viniar $4.7 million.

Blankfein owned 2.6 million Goldman shares through restricted stock awards and options worth more than $555 million as of Jan. 26, according to the proxy. Winkelried owned 2.1 million shares valued at $452 million, followed by Chief Financial Officer David Viniar's 1.31 million shares valued at $280 million and Vice Chairman John Weinberg's 1.3 million shares valued at $278 million. Cohn owned 1.2 million shares valued at $260 million.

Before he was promoted to chief executive last year, Blankfein was both president and chief operating officer, responsibilities now split between Cohn and Winkelried. Goldman paid Blankfein $38 million in 2005, outpacing Merrill Lynch & Co.'s Stanley O'Neal, who received $35.4 million in 2005.

Investment bankers don't make the most money on Wall Street. The 10 highest paid hedge-fund managers each made between $200 million and $1.5 billion in 2005, according to a report in Institutional Investor's Alpha magazine last year.

$60 Billion Last Year

The five biggest U.S. securities firms -- Goldman, Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns Cos. -- paid their 177,479 employees more than $60 billion in salary, bonuses and benefits in 2006.

That works out to an average of $342,913 per employee, or almost twice the $177,852 that the U.S. Army pays a four-star general with at least 26 years of experience to serve in Iraq or Afghanistan, including allowances for family separation, hazardous duty and imminent danger.

Barney Frank, a Massachusetts Democrat who serves as chairman of the U.S. House Financial Services committee, said in an interview yesterday that he supports raising the top income tax rate to 40 percent from 35 percent so that Wall Street's multimillionaires would contribute more.

``They should be paying higher taxes as a trade-off for all the capital-markets incentives they got, such as the capital- gains rate,'' he said.

Paulson's Pay

Paulson, who left Goldman in June to become U.S. Treasury secretary, received $110.1 million in cash for his outstanding stock options and restricted shares before he left, according to today's filing. Goldman also paid Paulson and his wife about $51 million to purchase their investments in Goldman-managed private equity and hedge funds, the proxy said.

Cohn, who joined Goldman's J. Aron & Co. commodities-trading unit in 1990, held more restricted stock than any of the firm's top officers at the end of the November, the filing showed. He held restricted shares valued at $87.4 million as of Nov. 24, compared with $78.1 million owned by Blankfein and $78.3 million owned by Winkelried. Blankfein joined J. Aron in 1982 and Winkelried joined Goldman as an investment banker the same year.

``While the numbers themselves are very large, it's hard to see how there could be an outcry when performance has been so strong,'' said Laura Thatcher, who runs the executive compensation practice at Atlanta-based law firm Alston & Bird LLP. ``Where you do have good performance, paying for it is part of the game. It's paying for poor performance that is and should be frowned upon.''

Last Payment

Goldman also said it paid John L. Weinberg, the firm's former leader who died in August, $6.25 million for fiscal 2006. Weinberg's son, John S. Weinberg, is a vice chairman and co-head of investment banking at the firm.

The firm set aside a total of $16.5 billion last year to pay salaries, bonuses and benefits for its 26,467 employees.

Goldman's annual shareholder meeting will take place on March 27, the filing said.

source:www.bloomberg.com