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Goldman rushes awards

Company speeds up $65 million in stock awards to avoid tax hike

By Korea Herald

Published : Jan. 3, 2013 - 20:12

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Goldman Sachs Group Inc. accelerated delivery of $65 million in stock awards to 10 executives, including Chief Executive Officer Lloyd C. Blankfein, helping them avoid higher tax rates that take effect this year.

The awards are restricted stock granted for years prior to 2012, according to 10 separate filings made public at about 8 p.m. New York time on Monday. Each executive surrendered 45 percent to 50 percent of their awards in order to pay taxes, according to the filings. The firm’s stock climbed 41 percent in 2012, its first annual gain since 2009.

Goldman Sachs, the fifth-biggest U.S. bank by assets, typically delivers executives’ restricted stock during January. The decision to speed up the delivery came as the U.S. Congress debated and ultimately passed a bill that would increase tax rates on capital gains and on individuals who make taxable income of $400,000 or more. 
Lloyd Blankfein. (Bloomberg) Lloyd Blankfein. (Bloomberg)

“The December delivery of shares went to a wider group of employees than the named executive officers” who were included in the filings, said Michael DuVally, a spokesman for the New York-based firm. He declined to comment on the reason for the accelerated delivery or on which other employees received stock early.

Blankfein, 58, has said he would be willing to pay higher taxes if they were part of a fiscal compromise to reduce the budget deficit. Wednesday he praised the bill that passed the House of Representatives Tuesday.

“This agreement is a step forward to injecting growth and investor confidence into the U.S. economy,” he said in an emailed statement. “While more progress clearly will be needed, particularly in regards to restraining the growth in government spending, this measure lays the foundation for more economic growth.”

Blankfein received 66,065 shares of restricted stock on Monday, worth $8.43 million at the closing share price that day, according to a company filing. The filing shows that he sold 33,245 shares for $126.24 apiece, although a footnote explains that those shares were in fact retained by the company “to satisfy withholding obligations.”

Goldman Sachs wasn’t the only firm to help its executives reduce their tax bill. Jefferies Group Inc., the investment bank that agreed in November to sell itself to its biggest shareholder, Leucadia National Corp., accelerated the delivery of dividends in the form of deferred shares to its executives on Monday, according to company filings.

Richard Handler, 51, chief executive officer of New York- based Jefferies, received 36,872 deferred shares at $18.57 each, worth $684,713. Brian Friedman, 57, chairman of Jefferies’s executive committee, received 9,321 shares at that price, valued at $173,091. 

Gary D. Cohn, 52, Goldman Sachs’s president and chief operating officer, and David A. Viniar, 57, the firm’s chief financial officer, received the same number of shares as Blankfein and had the same amount withheld, according to filings. 

The other executives who received and surrendered shares for withholding purposes were Vice Chairmen John S. Weinberg, 55, and J. Michael Evans, 55; Edith Cooper, the 51-year-old head of human capital management; John F.W. Rogers, the firm’s 56- year-old chief of staff; General Counsel Gregory K. Palm, 64; Global Head of Compliance Alan M. Cohen, 62; and Chief Accounting Officer Sarah Smith.

Goldman Sachs is required to file disclosures of changes in stock ownership by its 12 executive officers. The firm made no disclosures of stock activity on Monday by Vice Chairman Michael S. Sherwood, a 47-year-old British citizen based in London, or by Mark Schwartz, the Hong Kong-based head of the firm’s Asian business. Schwartz, a 58-year-old U.S. citizen, rejoined the firm in June after 11 years away.

Below is a table of stock delivered to each of the Goldman Sachs executives and the amount surrendered for withholding purposes, according to company filings. 

(Bloomberg)