Will Chase, Goldman Sachs Exec-Pay Deals Soften Critics?

Surprising to many, JPMorgan Chase Chief Executive Jamie Dimon led Wall Street’s big financial firms in 2009 compensation packages for top executives with a deal worth about $16 million in mostly restricted stock and options – no cash.

But the biggest stunner Friday was the announced $9 million bonus – also consisting of stocks – for Goldman Sachs Chairman and Chief Executive Lloyd Blankfein, who was anticipated to receive a package in the $40-$50 million ballpark. Blankfein got a $68.5 million payout in 2007 – one of the last sky-high payouts before the financial crisis fully erupted.

Both executives steered their financial giants to impressive profit performances last year. Chase, the second-largest U.S. bank and the top credit card issuer, saw $11.7 billion in earnings. Goldman Sachs, the global investment banking and securities perennial, earned $13.39 billion and produced a 22.5 percent return on average for common shareholders’ equity.

The pay and bonus packages for the two executives are unlikely to soften the criticism from President Obama and many Democrats seeking to implement historic financial reforms, including the president’s proposed “Financial Crisis Responsibility” bank fee, and the so-called Volcker Rule, which would separate big banks from their lucrative-but-riskier speculative investment operations. Former Federal Reserve chairman Paul Volcker, and one of Obama’s top economic advisors, is the chief proponent of the restructuring of big banks.

“Now, like clockwork, the banks and politicians who curry their favor are already trying to stop this fee from going into effect,” President Obama said during a weekly radio address last month, referring to his proposal of imposing a fee on major financial firms with more than $50 billion in assets. “The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty.  It’s a sight to see.”

Now, the “softer” pay deals for top Wall Street executives will likely not help Obama’s cause. Talks on financial reform have reportedly stalled in the Senate this week, a stalemate fueled primarily by Republican and bank groups’ opposition to Obama’s proposed Consumer Financial Protection Agency, a new body that critics fear will add bureaucracy and a vague, new top tier to the existing batch of regulatory agencies.

Along with Goldman’s Blankfein, four of his lieutenants also were awarded $9 million each – 58,381 stock units, worth $8.99 million based on Friday’s closing share price. The bonuses consist entirely of stock, signaling a shift by Goldman and other financial firms to tie compensation closely to company performance.

Chase’s Dimon received 195,704 shares that are restricted until January 2013. He also received 563,562 in “stock appreciation rights” or options that expire in January 2020 and have an exercise price of $43.20, according to an SEC filing.

Dimon’s deal for 2009 was higher than last year, when he did not get stock or option awards, but it pales in comparison to his almost $30 million in cash, stock and options for 2007.