Goldman’s Compensation Falls, Part of Longer Term Plan

According to The Times, the 2008 stock option grant came at a time when the firm's financial performance took a hit and its top executives were not paid bonuses. The grant, much of it awarded to partners, gave options that could be exercised in one-third installments in January 2010, January 2011 and January 2012. The shares cannot be sold or transferred until January 2014. The award has already helped increase the partners' stake in Goldman to 11.2% from 8.7%. And as additional options vest, the partners' control of the firm will most likely increase.

As the paper notes, Goldman's stock has returned nearly 175% since the close of its May 1999 initial public offering. The Standard & Poor's 500-stock index over the same period has lost almost 2.9%. But the gains of Goldman employees from stock options since the financial collapse have been particularly striking.

In December 2008, just three months after the bankruptcy of Lehman Brothers brought the financial system to the brink, Goldman awarded the nearly 36 million stock options, according to The Times. The number approved by Goldman's board dwarfed not only the previous year's grant of 3.5 million options, but also exceed the entire amount of options previously outstanding. The December 2008 options grant was disclosed as required, but received scant attention at the time.

The paper notes that while partners cannot sell new stock when they exercise the options for another few years, and thus cannot yet lock in their gains, the increased value nonetheless indicates how much they stand to gain when they can.