Goldman Sachs' top executive has defended the investment giant's executive pay policies, saying they underscore the principle of 'pay for performance'.
Goldman's chairman and CEO Lloyd Blankfein told a banking conference that although his firm's executives received an average of $196,000 annually compared with under $80,000 for most of its rivals, its profits were higher as well.
'We believe in pay for performance,' he told the meeting organised by Bank of America and its Merrill Lynch brokerage unit .
Goldman Sachs had 'established a prudent culture of risk management,' he added.
His comments come amid a movement to rein in lavish executive pay and bonuses, blamed for encouraging excessive risk taking that fueled the global credit crisis and brought the US financial sector to the brink of collapse a year ago.
Blankfein said overall compensation at Goldman represented 46.7% of revenues at the investment firm compared with 52.1% at its main rivals. But he noted that Goldman profits were up 13.5% on average during that period compared with an average of 5.9%.
Goldman Sachs, which has managed to remain profitable during the crisis, posted a profit of $3.188 billion in the third quarter.
Some reports suggest Goldman and other big banking firms are preparing to pay out record bonuses, a move which could further inflame passions over the role of the sector in the economic crisis.
The Federal Reserve is proposing to limit incentive pay and bonuses at regulated banks to promote financial stability. The proposed rules stop short of specific pay caps or dollar targets for bonuses or commissions, but instead offer guidance for compliance with the rules.
Last year, Blankfein and six company leaders gave up their 2008 bonuses because of the financial crisis.
