The Director Compensation Project: Goldman Sachs Group, Inc.

This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation.  We are including companies from 2010’s Fortune 500 and using information found in their most recent proxy statements.  In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence.  While substantially the same, there are some minor differences between NYSE and NASDAQ rules that are worth noting.  

Under NYSE Rule 303A.01, all listed companies must have a majority of independent directors sitting on their boards.  Directors are not independent if they received over $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years pursuant to Rule 303A.02(b)(ii).  This is a looser restriction than the equivalent NASDAQ Rule, 5605(a)(2), which includes "any compensation."  Rules 303A.06 and 5605 also require that, in addition to the general independence standards, audit committee members must comport with the requirements of  Rule 10A-3 (C.F.R. §240.10A-3).  See also IM-5605-4. Audit Committee Composition.

One can see some of the effects of these rules when looking at the director compensation table from Goldman Sachs Group (NYSE:GS) 2011 proxy statement.  According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Lloyd C. Blankfein	6,000,000	7,650,013	0	464,067	14,116,423
John H. Bryan	0	100,204	375,800	20,000	496,004
Claes Dahlbäck	0	267,776	187,900	0	455,676
J. Michael Evans	6,000,000	7,650,013	0	277,165	13,927,508
Stephen Friedman	0	100,204	375,800	0	476,004
William W. George	0	267,776	187,900	20,000	475,676
Rajat K. Gupta*	0	75,076	375,800	0	450,876
James A. Johnson	0	100,204	375,800	19,559	495,563
Lois D. Juliber	0	267,776	187,900	20,000	475,676
Lakshmi N. Mittal	0	75,076	375,800	0	450,876
James J. Schiro	0	307,087	0	20,000	327,087
H. Lee Scott, Jr.**	0	0	0	0	0
Ruth J. Simmons*	0	75,076	375,800	0	450,876
John S. Weinberg	6,000,000	7,650,013	0	158,511	13,810,735

* Retired from the board in May 2010.

** Received prorated compensation for 2010 in early 2011.

Director Compensation.
All directors attended the annual meeting in 2010, and the directors each attended at least 75% of the meetings of the board and the committees on which he or she served. Overall attendance at board and committee meetings during 2010 averaged 98.5%. Independent directors do not receive any fees for attending board or committee meetings.

Director Tenure.
Mr. Johnson holds the board’s longest tenure and has been a director since May 1999. Mr. Schiro has the shortest tenure and began serving on the board in 2009. Several directors also sit on other boards.  Mr. George is a director of Exxon Mobile Corporation. Mr. Johnson is a director of Forestar Group Inc. and Target Corporation. Ms. Juliber is a director of E.I. du Pont de Nemours and Company and Kraft Foods Inc. Mr. Mittal is a director of European Aeronautic Defence and Space Company EADS N.V. Mr. Schiro is a director of PepsiCo, Inc., REVA Medical, Inc. and Royal Philips Electronics.

CEO Compensation.
The following individuals each received bonuses of $5.4 million in 2010: Mr. Blankfein, CEO; Gary D. Cohn, COO; David A. Viniar, CFO; J. Michael Evans, Vice Chairman; and John S. Weinberg, Vice Chairman.

Mr. Blankfein has been the Chairman and Chief Executive Officer of the Goldman Sachs Group since April 2003, and he has worked in other capacities for the company for 25 years. Mr. Blankfein received $128,676 for security, and he is authorized to use corporate aircraft for personal use. Goldman Sachs has created Employee Funds (private investment funds) and Mr. Blankenfein received $27.2 million in Employee Funds in 2010. The CFO is David A. Viniar and his total compensation for 2010 was $13,958,011. He has been the CFO since May 1999. He received $73,390 for security and he is also authorized to use corporate aircraft for personal use.