Lloyd Blankfein, the CEO of Goldman Sachs, faced a handful of critics and cranks during the firm’s annual meeting in Jersey City last week. He did his best to deal with the uninformed complaints of those who think they understand how the free market works, but who actually haven’t a clue.
Mr. Blankfein recently received a bonus of $5.4 million for 2010, which brought his total compensation for the year to just about $14 million. Mr. Blankfein made $1 million in 2009, which in the high-pressure, high-reward world of global finance is, well, peanuts. Yes, he did quite a bit better than he did in 2009. But let’s bear in mind that he could be making a ton more at a hedge fund or at another firm.
Mr. Blankfein will be the first to admit that he is not doing God’s work. He has taken no vows of poverty, nor does he pretend to be running a charitable enterprise. He’s a businessman in a ruthless field, working on behalf of his company’s shareholders.
If shareholders believe that Mr. Blankfein is worth $14 million, or $144 million, that’s their business. Fake populists and demagogues can rail all they want about Mr. Blankfein’s pay, but their opinions mean nothing. Mr. Blankfein certainly doesn’t need us to defend his salary and his competence. But we’ll take the opportunity to point out that he makes significantly less than a certain third baseman who works in the South Bronx. Despite the catcalls in Jersey City the other day, Mr. Blankfein and Goldman Sachs are having a better spring thus far than Alex Rodriguez, whose annual salary is double Mr. Blankfein’s total compensation package, including his bonus, for last year.
Executive compensation is a private matter. That’s how the free market works. Some politicians, however, appear to believe that somehow they ought to have a role in determining how much Mr. Blankfein and his colleagues should be paid, or what their pay ceiling ought to be.
Presumably the same politicians would object to voters setting salaries for, say, members of Congress or the State Legislature. Say this about Mr. Blankfein: Unlike most legislators, he can’t simply give himself a raise. He has to earn it. Government should aspire to that kind of accountability.