NEW YORK - GOLDMAN Sachs Group Chief Executive Lloyd Blankfein said on Thursday markets are probably in the late stages of the global credit crisis that began last summer, but he would not predict when it will end.
Mr Blankfein estimated the markets are more than half way to recovery, but declined to forecast how long the crisis would persist'We're closer to the end than the beginning,' Mr Blankfein said at the bank's annual shareholder meeting. 'I think we're getting to that point where people are seeing the light at the end of the tunnel.' He estimated the markets are more than half way to recovery, but declined to forecast how long the crisis would persist.
'Maybe we're at the end of the third quarter, beginning of the fourth quarter,' he said, though he cautioned that a recovery may still take a long time.
'If you watch sports, sometimes there's a lot of timeouts in the fourth quarter. It takes longer to play than any of the other quarters, and sometimes it ends in a tie and goes into overtime.' That said, Mr Blankfein told shareholders that Goldman always prepares for the worst as it weighs potential risks in its dealings.
'The world is nervous, and so are we,' Mr Blankfein said, adding that attitude always embodies the bank's approach to markets. 'Our natural state of rest, even in good times, is to be very nervous,' he said wryly.
Constant anxiety helped Goldman pull off one of the all-time great trades last year, when it bet securities tied to subprime mortgages would fall in value.
The bank's strategy generated billions of dollars in gains when the rest of the industry has been forced to write down nearly US$250 billion (S$342.5 billion) of mortgages, corporate loans and other assets now difficult to trade.
Goldman's traders and bankers prepare for any number of events they can imagine, even if they are highly unlikely, he said: 'It's not that anything can happen, it's everything will happen.' Blankfein's views carry a lot of weight in the market, as Goldman navigated last year's choppy waters and delivered record results.
Goldman shares, though well below their peak before the credit crisis, rose 12 per cent last year and outperformed rival banks.
Earlier this week Morgan Stanley CEO John Mack, using a baseball analogy, also predicted the end of the credit crunch was in view.
The subprime mortgage crisis, he said, was in the 'bottom of the eighth inning or top of the ninth,' with the broader crisis gripping markets for 'a couple of quarters' more. -- REUTERS
Goldman CEO says 'say on pay' a bad idea
NEW YORK - GOLDMAN Sachs Group Chief Executive Lloyd Blankfein, who received about US$70 million of compensation last year by some counts, said on Thursday that shareholder votes on executive pay would constrain the board and hurt the investment bank's ability to attract the best employees.
So-called 'say on pay' initiatives, which allow shareholders to provide a nonbinding approval or rejection of a board's proposed pay package for senior executives, have become a hot topic among shareholder groups, pensions and other large investors focused on corporate governance issues.
In a spirited annual meeting held in a downtown Manhattan, a number of Goldman shareholders urged the board and investors to adopt an advisory vote as a tool to keep a lid on excessive pay. Advocates also argued the proposal would give shareholders a greater voice on an important matter, without binding directors.
The board, he said, needs to have the flexibility to weigh compensation packages and the market environment. He also expressed concern that decisions by board member could be judged by uninformed investors.
'Our compensation has been very well-correlated to performance,' he said.
Goldman's shareholders apparently agreed, as the say on pay proposal was rejected, receiving approval by 43 per cent of shares voted and 30 percent of shares outstanding.
Some speakers argued Goldman's compensation was enormously high. According to the proxy statement, Goldman's top five senior executives received roughly US$250 million last year in salary, cash bonuses, stock awards and other compensation, excluding stock options.
For context, that haul was greater than JPMorgan Chase & Co's initial fire-sale takeover bid of US$236 million for Bear Stearns Cos.
Shareholder advocates upset about excessive CEO pay argue that advisory votes would let US shareholders, like their European counterparts, ratify or express disapproval of pay packages.
Still, most shareholders, including Timothy Smith of proposal sponsor Walden Asset Management, noted that Goldman has performed well.
In the end, Goldman shareholders showed themselves to be largely satisfied with the company's management following a year when Goldman stock rose 12 per cent, outperforming rivals, and when it generated record revenue and profit. All 12 directors won reelection, with 97 per cent of votes
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