As the mid-Atlantic region was hunkering down for a massive winter storm Friday afternoon, Goldman Sachs and JPMorgan Chase ended weeks of speculation on Wall Street and announced their CEOs’ bonuses: $9 million in stock for Goldman Sachs CEO Lloyd Blankfein and $16.6 million in restricted stock and options for JPMorgan chief
Rumors had earlier put Blankfein’s bonus anywhere from zero to $100 million — he set a Wall Street record with a $68 million bonus in 2007 — and the announcement late Friday had bankers surprised at the ‘modest’ level, given the Goldman just had the best quarter in its history.
Many on Wall Street saw the amount as a nod to the pressure from Washington for big banks to rein in bonuses.
“It takes a lot of the oxygen out of the argument that Goldman’s top of the house is overpaid,” Brian Foley, an independent compensation consultant in White Plains, N.Y. told the New York Times. “For running an organization that big, and bringing it through the way he did, nine million is not a lot of money.”
Late last week, two Democratic senators — Barbara Boxer of California and Jim Webb of Virginia — proposed a 50 percent tax on bank bonuses larger than $400,000, similar to a tax recently implemented in the United Kingdom. The proposed tax would apply to firms that received bailout money, including Goldman and JPMorgan.
In other Wall Street news over the weekend, John Thain, former CEO of Merrill Lynch when it was taken over by Bank of America*, was named the new chief executive of CIT, the major lender to small businesses that recently emerged from Chapter 11 bankruptcy. Taxpayers lost $2.3 billion in bailout money when CIT entered bankruptcy in November, the first company to post a bailout loss for the government.
Thain came under fire in his final days at Merrill Lynch when he pushed through billions in employee bonuses even as the firm was posting huge losses, a move that continues to haunt Bank of America*, which took over Merrill in early 2009. He also infamously ordered a $35,000 commode as part of a $1.2 million refurbishing of his Merrill offices, making him a symbol of Wall Street excess at the height of the financial crisis. CIT has announced that Thain will receive a $6 million salary.
*For the record, Bank of America is a NewsHour underwriter.