Goldman Sachs' Paulson Latest for Comp Cuts

With an 8%-drop in 2002 earnings and fresh from a host of Wall Street regulatory probes, Goldman Sachs announced in a regulatory filing that it had slashed Chief Executive Henry Paulson’s 2002 compensation package by 36%, according to a Reuters report. Goldman’s revenue dropped 27% last year, forcing the firm to cut costs and staff.

Paulson pulled down a total 2002 package worth $12.1 million, including a $6.3-million bonus, according to the company’s proxy filing with the US Securities and Exchange Commission.  In 2001, Goldman paid him $18.9 million, with a bonus of $11.6 million, making it Paulson’s third pay cut in a row.Goldman cut Paulson’s cash bonus and stock options grant, but handed him $2.6 million in restricted stock awards, compared with no stock awards in 2001.

Paulson, 56, joins rival CEOs, such as Citigroup Inc.’s Sandy Weill and Philip Purcell of Morgan Stanley who will also be lighter in the wallet after last year. Paulson had to cope with regulatory probes that also affected rivals such as Merrill Lynch & Co. and Citigroup. Goldman and 11 other investment banks agreed to pay a combined $1.5 billion to settle charges they misled investors by issuing overly bullish research to win banking deals.

Paulson’s top lieutenants also took a hit.  John Thain and John Thornton, co-chief operating officers and presidents, each pocketed $11.2 million last year, compared with $16.3 million in 2001.

Citigroup said this month Weill declined to take a stock or cash bonus for 2002 because of the company’s financial performance. Morgan Stanley said on February 19 it cut Purcell’s annual pay 26% as the firm was hindered by challenging market conditions. (See   Performance Woes Lead to Bank Execs’ Comp. Cuts  ).