At the meeting two years ago, as public outrage over Wall Street bonuses swelled following the government bailouts of financial institutions, Blankfein read shareholders a description of Goldman Sachs's compensation principles. The principles included an emphasis on tying pay to long-term firm performance and avoiding multiyear guarantees.
Cash Bonuses
Blankfein, who's also Goldman Sachs's chairman, and top deputies including Gary D. Cohn, president and chief operating officer, and David A. Viniar, chief financial officer, received no bonuses for 2008 and no cash bonuses for 2009. Earlier this year, Goldman Sachs disclosed that it was increasing salaries for Blankfein and his deputies and paid Blankfein $19 million for 2010, including a $5.4 million cash bonus.
Institutional Shareholder Services Inc. recommended that stockholders cast a non-binding vote against the awards for Goldman Sachs's executive officers. The ISS report cites a "pay-for-performance disconnect" after Goldman Sachs's executives' compensation increased even as profits fell last year.
Glass Lewis & Co., another proxy advisory service, expressed concern about Goldman Sachs's "opaque program" for determining compensation, even though it recommended that shareholders vote in favor of the awards.
Social Responsibility
Christian Brothers Investment Services Inc., which manages $4 billion and owns about 68,000 Goldman Sachs shares, is voting against the pay awards this year, said Julie Tanner, the firm's assistant director of social responsibility.
"I don't think that the pay level is justified," Tanner said in an interview. "There's a level beyond which pay is not appropriate and needs to be reined in, and I think this company is one of those examples."
For investors like Sorrentino, a bigger concern is how the company plans to drive revenue and profit growth going forward. Although the firm rebounded from the crisis to achieve record profit in 2009, earnings sagged last year and in the first quarter of 2011.
Goldman Sachs's return on equity, a measure of how well the firm reinvests shareholder capital, dropped to 11.5 percent in 2010 from 32.7 percent three years earlier. While it still beats competitors including Morgan Stanley, whose 2010 return on equity from continuing operations was 8.5 percent, investors question whether the firm can achieve its former profitability.
"There is a more competitive framework out there and they do have to scrape for business," Sorrentino said. "In the regulatory environment we find ourselves in, where does Goldman sit in all this? How should we set our expectations for success going forward?"
Two More Years
Blankfein's future at the firm continues to be subject to speculation. Earlier this week, the New York Post, citing people it didn't identify, reported that Blankfein is likely to stay for at least two more years. The company has said he has no plans to leave.
"Probably starting about now is when he could safely leave and say he got Goldman through everything," said Grimes & Co.'s Wallace. "But maybe with all the PR stuff, you want to stay on because one thing you want to do when you turn it over to new leadership is have a clean slate."