Goldman Sachs

Goldman gives stock awards early before tax rises

PUBLISHED : Friday, 04 January, 2013, 12:00am
UPDATED : Friday, 04 January, 2013, 2:48am

Goldman Sachs has accelerated delivery of US$65 million in stock awards to 10 executives, including chief executive Lloyd Blankfein, helping them avoid higher tax rates that take effect this year.

The awards are restricted stock granted for years prior to last year, according to 10 filings made public on December 31.

Each executive surrendered 45 per cent to 50 per cent of his or her award in order to pay taxes, according to the filings.

Goldman, the fifth-biggest bank in the United States by assets, typically delivers executives' restricted stock in January.

The decision to speed up the delivery came as the US Congress debated and ultimately passed a bill that would increase tax rates on capital gains and on individuals who make taxable income of US$400,000 or more.

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

Blankfein has said he would be willing to pay higher taxes if they were part of a fiscal compromise to reduce the budget deficit.

Blankfein received 66,065 shares of restricted stock on December 31, worth US$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 US$126.24 each, although a footnote explains that those shares were in fact retained by the company "to satisfy withholding obligations".

One of Goldman's Wall Street rivals took a different approach to the changing tax landscape. Jefferies Group, the investment bank that agreed in November to sell itself to its biggest owner, Leucadia National, accelerated the delivery of dividends to all shareholders, including executives, on December 31, according to company filings.

"We expedited the regular dividend payment for all Jefferies shareholders in anticipation of increased rates," the firm said in a statement. "Our top executives were treated identically to every other shareholder."

Some of the executives' dividends were awarded as deferred stock, according to the filings. Those shares "will be taxed at the higher rates when they ultimately vest", the company said.