'Pay Czar' Takes Credit for Low Goldman Bonus

(Feb 8.) -- Reviled investment banking firm Goldman Sachs earned unexpected praise last Friday after revealing that CEO Lloyd C. Blankfein's 2009 bonus would be a mere $9 million -- down from the record $67.9 million bonus he received in 2007 and a fraction of the eye-popping $100 million that was anticipated by some major news outlets. Now President Barack Obama's "pay czar" has come out endorsing the move as one of his own design.

"To a large extent, I think [Blankfein] has succeeded in adopting the prescriptions we laid out," said Kenneth Feinberg, special master on executive compensation, in an interview with Bloomberg TV on Monday.

Feinberg qualified his statement by saying that overall executive compensation by top firms is still excessive. Asked whether the $9 million given to Blankfein was too much, he told Bloomberg, "If you look at the 700 people that are under my mandatory jurisdiction, I do not believe there is more than one or two in the total of 700 that are making that type of total compensation." Several lawsuits concerning the validity of executive compensation were recently filed against Goldman Sachs.

Blankfein's $9 million bonus includes no cash, but upwards of 58,000 shares of stock that cannot be traded for five years. The payout comes just weeks after Goldman posted another quarter of record-high earnings, at $4.95 billion. And though it's lower than some projections, it's still a striking departure from 2008, when Blankfein, like other top financial executives, declined their bonuses entirely, attempting to save face in the midst of the global financial crisis.

Goldman Sachs in particular has faced intense government heat and populist fury for its complicity in the marketwide collapse, its acceptance of Troubled Asset Relief Program (TARP) bailout money and its reputed "shady dealings" with insurance giant and fellow executive-compensation offender AIG. Goldman's image has been maligned further from subsequent P.R. blunders, such as when Blankfein told the Times of London last November that he thought Goldman was doing "God's work."

Yet the firm has remained financially successful, rebounding greatly in the past year and even paying back its $10 billion share of the bailout funds early, plus a 23 percent annualized return.

Feinberg, an adjunct professor at Georgetown and Columbia, first rose to national political prominence after being appointed the special master of the September 11th Victim Compensation Fund, which was set up to repay surviving relatives of the terrorist attack victims. He later presided over the fund set up for the families of those killed in the 2007 Virginia Tech mass shooting. In June 2009, the Treasury Department appointed him to his current role as "pay czar," overseeing the compensation of employees at the seven multinational companies that have received bailout funds.

In each of his federal administrative capacities, Feinberg has eschewed compensation himself, working entirely pro bono.