DEF 14A 1 d904615ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

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The Goldman Sachs Group, Inc.

 

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  The Goldman Sachs Group, Inc.

 

        LOGO

 

  Proxy Statement

 

  2015 Annual Meeting of Shareholders

       
       

 

 

 


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The Goldman Sachs Group, Inc.

 

Notice of 2015 Annual Meeting of Shareholders

 

 

Time and Date

8:30 a.m., local time, on Thursday, May 21, 2015

 

Place

Goldman Sachs offices located at 555 California Street, San Francisco, California 94104

 

Items of Business

¡   Election to our Board of Directors of the 13 director nominees named in the attached Proxy Statement for a one-year term

 

  ¡   An advisory vote to approve executive compensation (say on pay)  

 

  ¡   Approval of The Goldman Sachs Amended and Restated Stock Incentive Plan (2015)  

 

  ¡   Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2015  

 

  ¡   Consideration of shareholder proposals, if properly presented by the relevant shareholder proponents  

 

  ¡   Transaction of such other business as may properly come before our 2015 Annual Meeting of Shareholders  

 

Record Date

The record date for the determination of the shareholders entitled to vote at our 2015 Annual Meeting of Shareholders, or any adjournments or postponements thereof, was the close of business on March 23, 2015.

Important Notice Regarding the Availability of Proxy Materials for our Annual Meeting to be held on May 21, 2015. Our Proxy Statement, 2014 Annual Report to Shareholders and other materials are available on our website at www.gs.com/proxymaterials.

By Order of the Board of Directors,

LOGO

Beverly L. O’Toole

Assistant Secretary

April 10, 2015

 

Your vote is important to us. Please exercise your shareholder right to vote. By April 10, 2015, we will have sent to certain of our shareholders a Notice of Internet Availability of Proxy Materials (Notice). The Notice includes instructions on how to access our Proxy Statement and 2014 Annual Report to Shareholders and vote online. Shareholders who do not receive the Notice will continue to receive either a paper or an electronic copy of our proxy materials, which will be sent on or about April 14, 2015. For more information, see Frequently Asked Questions.


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Table of Contents

 

 

Letter from our Chairman and CEO     ii   
Letter from our Lead Director     iii   
Executive Summary     1   

2015 Annual Meeting Information

    1   

Matters to be Voted on at our 2015 Annual Meeting

    1   

Performance Highlights

    2   

Compensation Highlights

    4   

2015 Stock Incentive Plan Highlights

    8   

Corporate Governance Highlights

    10   
Corporate Governance     14   

Item 1. Election of Directors

    14   

Our Directors

    14   

Independence of Directors

    23   

Structure of our Board and Governance Practices

    24   

Our Board Committees

    24   

Board Leadership Structure

    27   

Year-Round Review of Board Composition

    29   

Board and Committee Evaluations

    30   

Board Oversight of our Firm

    31   

Key Areas of Board Oversight

    31   

Commitment of our Board – 2014 Meetings

    34   

Shareholder Engagement

    35   

Our Commitment to Active Engagement with our Shareholders

    35   
Compensation Matters     36   

Compensation Discussion and Analysis

    36   

Executive Compensation

    57   

2014 Summary Compensation Table

    57   

2014 Grants of Plan-Based Awards

    59   

2014 Outstanding Equity Awards at Fiscal Year-End

    60   

2014 Option Exercises and Stock Vested

    60   

2014 Pension Benefits

    61   

2014 Non-Qualified Deferred Compensation

    61   

Potential Payments Upon Termination or Change-in-Control

    63   

Report of our Compensation Committee

    66   

Item 2. An Advisory Vote to Approve Executive Compensation (Say on Pay)

    66   

Item 3. Approval of The Goldman Sachs Amended and Restated Stock Incentive Plan (2015)

    67   

Non-Employee Director Compensation Program

    75   
Audit Matters     79   

Report of our Audit Committee

    79   

Item 4. Ratification of Appointment of Independent Registered Public Accounting Firm

    79   
Items 5 – 7: Shareholder Proposals     81   
Certain Relationships and Related Transactions     86   
Beneficial Ownership     89   
Additional Information     92   
Frequently Asked Questions     94   
Annex A: Additional Details on Director Independence     A-1   
Annex B: The Goldman Sachs Amended and Restated Stock Incentive Plan (2015)     B-1   
Directions to our 2015 Annual Meeting of Shareholders     C-1   
 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      i   


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LOGO

April 10, 2015

Fellow Shareholders:

You are cordially invited to attend the 2015 Annual Meeting of Shareholders of The Goldman Sachs Group, Inc. We will hold the meeting on Thursday, May 21, 2015 at 8:30 a.m., local time, at our offices in San Francisco, California. We hope that you will be able to attend.

Enclosed you will find a notice setting forth the business expected to come before the meeting, a letter from our Lead Director, the Proxy Statement, a form of proxy and a copy of our 2014 Annual Report to Shareholders. Your vote is very important to us. Whether or not you plan to attend the meeting in person, we hope that your shares are represented and voted.

While the global economic recovery has remained fragile, we were pleased that our firm performed well, generating solid results for 2014 despite uneven conditions. Our performance benefitted from the strength of our global client franchise, the diversity of our businesses and our culture of adaptability.

We continue to focus on driving returns in a challenging macroeconomic environment while emphasizing the need to protect our ability to provide significant upside to our shareholders as the economic cycle turns. The basis for meeting these goals rests on a strong financial profile and a sustained operating discipline. Since the end of 2007, our balance sheet is down while our equity is up, resulting in gross leverage that has been cut by more than half. Over the same period, we have improved our capital and liquidity measures while maintaining our commitment to serve our clients through our core set of businesses over the cycle.

These efforts not only protected near-term returns, they have also positioned the firm to benefit from operating leverage when the environment improves. In this vein, we see a number of growth opportunities across our major businesses, which Gary Cohn, our President and COO, and I detail in our 2014 Letter to Shareholders. I hope you have a chance to read the letter, which also includes additional discussion on our performance, financial stability, strategy and culture of client focus and teamwork.

Lastly, I want to pause to remember my fellow director and trusted adviser, James J. Schiro, who passed away last year. Jim was an important voice on our Board, serving as an exemplary Lead Director. His wisdom, judgment and probing questions had a significant impact on our Board and our firm. He was an exceptional individual and I was deeply saddened by his passing.

Following Jim’s retirement, Adebayo O. Ogunlesi was appointed Lead Director and the Board and our shareholders are very fortunate to benefit from his experience, intellect and energy.

I would like to thank you for your confidence in Goldman Sachs. I look forward to welcoming many of you to our Annual Meeting.

LOGO

Lloyd C. Blankfein

Chairman and Chief Executive Officer

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      ii   


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LOGO

April 10, 2015

To my fellow shareholders:

It was a great honor to be elected by our independent directors as the Lead Director in July 2014 when James J. Schiro left our Board. Jim was a committed and proactive Lead Director, who developed a sound foundation for shareholder engagement that I intend to follow. Jim was known for his advice, which was much sought after for being both balanced and candid. We were very saddened by his passing and we will miss him, his dedication, his precision and his genuine kindness.

It has been an active eight months, and I wanted to update you on some of the key areas that I have been focused on.

Engagement

As a Board, we are committed to open and constructive dialogue with our shareholders and other key constituents. Engaging directly with our shareholders was one of my first priorities upon assuming my responsibilities. As a result, a few months after taking on the Lead Director role I met with many of our largest shareholders, representing approximately 35% of our shares outstanding, in New York, Boston, Sacramento, San Francisco and Los Angeles. These meetings allowed me to gain valuable insights and be better positioned to serve your interests. I was able to receive direct feedback from you on a wide range of issues, including board composition, board leadership structure, succession planning, executive compensation, the impact of regulation and reputational risk. These conversations proved to be critical inputs to the Board’s deliberations. And, as you will read in more detail in the accompanying Proxy Statement, our Board listened carefully to your feedback and made changes that advance our shared goal of building an increasingly valuable and enduring firm.

Given the importance of the regulatory environment in which we operate, I, along with my fellow directors, also meet with our regulators often to provide direct insight into our Board’s operation and effectiveness and receive their feedback. In addition, the Board remains as focused as ever on our oversight of the firm’s risk management, including such key matters as our Capital Plan submitted as part of the Comprehensive Capital Analysis and Review as well as our Risk Appetite Statement.

Board Effectiveness

We also used the occasion of the change in leadership to take a fresh look at our Board’s effectiveness. It has always been our aim to operate our Board in the most efficient and effective manner possible.

Each year, our Governance Committee, which I chair, conducts an evaluation of the performance of our Board; each of our committees also conducts an annual self-evaluation of its performance. To keep the evaluation process fresh and focus our attention on key topics, we enhanced our process this year. We also added an individual assessment of director performance, as further described in the Proxy Statement. These evaluations, coupled with the one-on-one meetings I conducted with each of our non-employee directors, provided invaluable feedback on the operation of our Board and committees that translates into specific changes.

Committee Structure

This past year we also conducted an additional analysis of our historical committee structure, which had consisted of each of our independent directors serving on each of our standing committees. While there is no doubt that this structure served us well in the past, our Board and its committees have continued to grow, increasing from three committees to five in recent years. In addition, each committee’s remit has expanded, in part due to increasing regulatory requirements. We decided that more focused committees would enable each director to expand his or her focus and expertise in critical areas of the Board’s oversight, such as Audit, Risk and Compensation. Further, in recognition of the exceedingly important work of our Public Responsibilities Subcommittee, we changed the Subcommittee to a standing committee of our Board.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      iii   


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Board Composition

We are keenly aware that our shareholders, regulators and other constituents are focused on who our directors are. Our review of our Board’s composition is an ongoing, year-round process, focused on ensuring that our Board has the right mix of skills and qualifications to carry out its duties. To this end, we welcomed our two newest directors to our Board in December 2014, Mark Flaherty and Mark Winkelman, who are each also members of our Audit, Governance and Risk Committees. Our evaluations led to us seeking additional directors who had an understanding of risk for the financial services industry and an institutional investor perspective. Mr. Flaherty, with more than twenty years of experience in investment management, including as a former leader of one of the largest institutional investors, brings a wide range of understanding of all of these matters. Mr. Winkelman has worked in a variety of different capacities in the capital markets and has demonstrated keen judgment, market knowledge and effective risk management over his career. I look forward to their continued contributions to our Board.

I also want to take the opportunity to thank our colleague, Claes Dahlbäck, for his many years of dedicated service to our Board. For over a decade, our Board has benefitted from his international perspective, sound judgment and constant counsel. I am glad we will continue to benefit from his dedication to our firm as he continues to provide insight to the board of Goldman Sachs International, a subsidiary of the firm.

In addition to making recommendations regarding new directors, our Governance Committee has also enhanced its processes regarding succession planning for leadership positions on our Board, such as Committee Chairs and the Lead Director. We understand the importance our shareholders and other constituents place on having the right people serving in these integral positions, and are focused on ensuring smooth transitions.

In conclusion, I look forward to continuing our active dialogue with you and other key constituents around important issues facing the firm. I thank each of you for your support.

 

LOGO

Adebayo O. Ogunlesi

Lead Director

 

  iv      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  


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Executive Summary

This summary highlights certain information from our Proxy Statement for the 2015 Annual Meeting of Shareholders (Annual Meeting). You should read the entire Proxy Statement carefully before voting.

2015 Annual Meeting Information

 

Date    Time      Place      Record Date

May 21, 2015

       8:30 a.m., local time         Goldman Sachs offices located at: 555 California Street, San Francisco, California 94104      March 23, 2015

For additional information about our Annual Meeting, see Frequently Asked Questions.

Matters to be Voted on at our 2015 Annual Meeting

 

      Board Recommendation
Item 1. Election of Directors (see page 14)    FOR each director

Other Management Proposals

    
Item 2. Advisory Vote to Approve Executive Compensation (Say on Pay)
(see page 66)
   FOR
Item 3. Approval of The Goldman Sachs Amended and Restated Stock Incentive Plan (2015) (see page 67)    FOR
Item  4. Ratification of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for 2015 (see page 79)    FOR

Shareholder Proposals

    

Item 5. Shareholder Proposal Regarding Vote-Counting (see page 81)

Requests that all matters voted on by shareholders be decided by a majority of votes cast not including abstentions

   AGAINST

Item  6. Shareholder Proposal Regarding Vesting of Equity Awards Upon Entering Government Service (see page 83)

Requests a report naming all senior executives who are eligible to receive vesting of equity awards upon entering government service, including dollar value of such awards

   AGAINST

Item  7. Shareholder Proposal Regarding Right to Act by Written Consent
(see page 84)

Requests that shareholders have the right to act by written consent in lieu of a meeting

   AGAINST

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      1   


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Performance Highlights

We have highlighted certain key aspects of our firm’s performance below. Information is provided for 2014 performance, as well as in the broader context of our performance in recent years and relative to peers. We encourage you to read the following highlights as a background to the discussion of our Compensation Highlights that follows.*

 

Best-In-Class Performance

 

  ¡  

Against a backdrop of stable revenues, we improved several key metrics in 2014:

 

 

LOGO

 

 

  1 

Leverage Ratio is calculated as total assets divided by total shareholders’ equity.

  2 

U.S. peers comprised of Bank of America Corp. (BAC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS).

 

 

Revenue Replacement

 

  ¡  

We successfully replaced revenue streams lost from exited businesses:

 

 

LOGO

 

  1 

Net revenues from business and investments we have exited reflect both operating net revenues and gains on sales in 2012.

 

  ¡  

Since 2012, we undertook several strategic initiatives to respond to new regulations and at the same time reduce risk for the firm.

 

 

  ¡  

We sold a majority stake in our Americas Reinsurance and European Insurance businesses and liquidated our investment in Industrial and Commercial Bank of China Limited. We also sold our hedge fund administration business and our ownership stake in the REDI trading technology platform.

 

 

  ¡  

The firm adapted and sourced new revenue opportunities and was able to maintain stable revenues, despite a $2.3 billion decrease since 2012 of net revenues and gains on sales from exited businesses and investments.

 

 

  * For definitions of certain terms used in this Executive Summary, see Frequently Asked Questions.

 

  2      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

2012 vs. 2014 Net Revenues Key Shareholder Metrics — Improvement from 2012 to 2014


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Performance Enhanced by Share Buybacks

 

  ¡  

Our longstanding history of active capital management has enhanced our performance:

 

 

LOGO

 

  1 

Graphic shows impact of the firm’s share buybacks during 2010-2014 on the firm’s 2014 performance metrics as compared to the calculation of these metrics if no such buybacks had occurred.

 

Disciplined Manager of Capital

 

  ¡  

We have been a disciplined allocator of capital, returning excess to shareholders through share buybacks and dividends:

 

 

LOGO

 

  1 

U.S. peers comprised of C, JPM and MS; reflects total repurchases of common stock and total dividends to common shareholders; payout ratio is equivalent to dividends and buybacks divided by net income to common shareholders. BAC is excluded because significant losses during the period resulted in a cumulative payout ratio that is not comparable. The U.S. peer average total payout ratio (2010-2014) including BAC is 36%.

  2 

U.S. peers comprised of BAC, C, JPM and MS; reflects total repurchases of common stock and total dividends to common shareholders during 2010-2014 as a percentage of 2010 beginning common shareholders’ equity.

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      3   

Benefit of Past Five Years of Buybacks on our 2014 Performance1 Over time, we have seen improvement across all of our capital ratios. For example, since our initial disclosure of our 2nd quarter 2013 Basel III fully phased-in advanced ratio, we have improved the ratio by 180bps.


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Disciplined Manager of Expenses

 

  ¡  

We continue to focus on expense discipline, including compensation expense. Our 2014 compensation ratio of 36.8% is our second-lowest since becoming a public company.

 

 

  ¡  

The firm’s 2009-2014 average compensation ratio is 910bps lower than the 2000-2007 average compensation ratio:

 

 

 

LOGO

Compensation Highlights (see Compensation Matters beginning on page 36)

We provide highlights of our compensation program below. It is important that you review our Compensation Discussion and Analysis and compensation-related tables for a complete understanding of our compensation program.

Our 2014 Named Executive Officers (NEOs) are: Lloyd C. Blankfein (CEO), Gary D. Cohn (COO), Harvey M. Schwartz (CFO), Mark Schwartz (a Vice Chairman and Chairman of Goldman Sachs Asia Pacific) and Michael S. Sherwood (a Vice Chairman and Co-CEO of Goldman Sachs International). We also refer to the individuals (currently six in total) serving as CEO, COO, CFO or Vice Chairman of the firm as our Senior Executives or SEOs.

 

Shareholder Engagement and Response

 

  ¡  

Continued Shareholder Outreach. We continued to engage with our investors in 2014, meeting with shareholders representing approximately 55% of our shares outstanding. Our prior advisory votes to approve NEO compensation have received the solid support of our shareholders (average support of approximately 87% of votes cast over the past three years and 83% last year), which our Compensation Committee believes indicates support for our program. Shareholders have consistently expressed the desire for the firm to introduce an element of metrics-based compensation into our annual compensation program.

 

  4      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

GS Average Compensation Ratio


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  ¡  

Our Compensation Committee Responded. Our Compensation Committee carefully considered feedback from shareholders and other constituents and has made several enhancements to our executive compensation program that address key points of shareholder focus:

 

 

Shareholder Feedback

 

 

Our Compensation Committee’s Response

 

Performance-Based Equity-Based Awards (pages 37,49)

 

¡        A portion of annual equity-based awards should be metrics-based

 

ü       For the first time, awarded “PSUs” – performance-based restricted stock units (RSUs), which are RSUs tied to specific pre-established performance metrics to our CEO, COO and CFO to reflect their firmwide responsibilities

 

ü        PSUs comprise one-half of each of these executives’ 2014 equity-based awards and will only pay out at target if the firm maintains an average “ROE” (as calculated under the PSUs) of 11% over 2015-2017 (see page 49 for calculation information)

Clawback Policy (page 54)

 

¡        Implement clawback policy for variable compensation

 

¡        Expand clawback provisions for restatement of financials due to misconduct (Sarbanes-Oxley Clawback) to all SEOs

 

ü       Formalized a clawback policy for applicable variable compensation

 

ü        Expanded Sarbanes-Oxley Clawback (covers equity-based and cash variable compensation) to all SEOs (even though statutory provision applies only to CEO and CFO)

Stock Ownership Guidelines (page 54)

 

¡        Implement formalized stock ownership guidelines

 

ü       Adopted stock ownership guidelines for all SEOs (10x base salary for our CEO; 6x base salary for our other SEOs)

Long-Term Performance Incentive Plan (LTIP) (pages 7,51)

 

¡        Reduce Compensation Committee discretion with respect to operation of our LTIP program

 

ü       Eliminated its discretion to adjust final payout of new LTIP awards based on individual performance; payout will be determined based on pre-established metrics only (clawback/forfeiture provisions continue to apply)

 

ü        Set an upfront expectation that awards will have an eight-year performance period, except in limited circumstances, minimizing situations in which the Committee would not extend the performance period

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      5   


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2014 Annual NEO Compensation Decisions

 

  ¡  

The following table summarizes our Compensation Committee’s 2014 annual compensation decisions for our NEOs:

 

 

(Dollar figures shown in millions)
          Variable Compensation      
Name and Principal Position   Salary/Equity-
Based Fixed
Allowance
   Cash    Restricted Stock
Units (RSUs)
  

Performance-

Based RSUs
(PSUs)

(New for 2014)

   Total

Lloyd C. Blankfein

Chairman and CEO

      $  2.0           $  7.33           $  7.33           $  7.33           $  24.0   

Gary D. Cohn

President and COO

      1.85           6.72           6.72           6.72           22.0   

Harvey M. Schwartz

Executive Vice President and CFO

      1.85           6.72           6.72           6.72           22.0   

Mark Schwartz

Vice Chairman

      1.85           5.72           11.43                     19.0   

Michael S. Sherwood

Vice Chairman

      1.85/9.15        1.83           9.17                     22.0   
  * Mr. Sherwood, who is based in the U.K., received a cash salary of $1.85 million and a fixed allowance of $9.15 million, payable entirely in equity-based awards. This fixed allowance was provided as a result of applicable U.K. regulatory guidance. See page 48 for more details.  

 

Compensation Committee Rationale for 2014 NEO Compensation Amounts

Our Compensation Committee determined, based on factors including an analysis of peer company compensation, that 2013 compensation amounts were an appropriate baseline for 2014 decisions. It also determined that total 2014 compensation for each NEO should be slightly increased (approximately 3-5%) based on its review of:

 

  ¡  

The firm’s financial performance (described on pages 2-4), including each NEO’s leadership role in guiding the firm’s:

 

 

  Continued improvement across key financial metrics such as net revenue, EPS, BVPS and ROE;  

 

  Disciplined management of its balance sheet, capital, liquidity and overall risk;  

 

 

Continued ROE outperformance of its U.S. peer group;1

 

 

  Significant efforts to broaden and enhance our client franchise, including a continued commitment to delivering high quality service to our clients;  

 

  Leading global brand as a result of factors including significant investment in content creation to engage our external constituents across multiple platforms; and  

 

 

Continued commitment to our franchise businesses, with particularly strong performance in investment banking, where the firm led both the equity and M&A league tables in 2014,2 and in investment management; and

 

 

  ¡  

Each NEO’s individual performance, including his focus on risk management and the firm’s safety and soundness (described on pages 40-42 ).

 

For more detail, see page 38.

 

  1

U.S. peers comprised of BAC, C, JPM and MS.

 

 

  2 

Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year per Thomson Reuters.

 

 

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Other Key Elements of Executive Compensation Program

 

  ¡  

Significant Portion of Annual Variable Compensation Paid in Equity-Based Awards. Two-thirds of 2014 annual variable compensation was awarded to each of our NEOs in equity-based awards, other than Mr. Sherwood, who received approximately 83% of his annual variable compensation in the form of equity-based awards as a result of applicable U.K. regulatory requirements. For more information regarding the terms of these awards, please see pages 49-50.

 

 

  ¡  

Significant Alignment with Shareholders’ Long-Term Interests. Additionally, our NEOs’ compensation is aligned with our shareholders’ long-term interests given the array of policies we have established that require significant and long-lasting ownership of our Common Stock and a continual focus on our long-term performance:

 

 

  ü Shares underlying RSUs are “Shares at Risk”:

 

  ¡  

Shares generally are delivered over three-year period following RSU grant.

 

  ¡  

Five-year transfer restrictions (from RSU grant date) apply to all or substantially all Shares at Risk that are delivered to NEOs after applicable tax withholding (other than shares underlying certain RSUs granted to Mr. Sherwood as a result of applicable U.K. regulatory guidance).

 

 

  ü Shares at Risk remain subject to our new Stock Ownership Guidelines, as well as contractual retention requirements, even after transfer restrictions no longer apply.  

 

  ü Clawback provisions can result in forfeiture or recapture of equity-based awards and underlying Shares at Risk.  

 

  ü Executive officers are prohibited from hedging or pledging equity-based awards and any shares of Common Stock subject to transfer restrictions.  

 

  ¡  

Executive officers are, in fact, prohibited from hedging any shares, including those that may be freely sold.

 

 

  ¡  

None of our executive officers has shares of Common Stock subject to a pledge.

 

  ¡  

Further Long-Term Alignment through LTIP Awards. Shareholders have told us that they continue to support a longer-term, metrics-based program that incentivizes our NEOs. Our Compensation Committee agrees.

 

 

  Given that the LTIP awards are intended to be longer-term, LTIP payout thresholds are more aspirational than the payout thresholds used for the PSUs.

 

  As noted above, based on shareholder feedback, our Compensation Committee made several key changes to our LTIP program, including:

 

  ¡  

Determining that it was appropriate to eliminate its discretion to adjust the award payout at the end of the performance period based on individual performance (clawback/forfeiture provisions continue to apply); and

 

 

  ¡  

Setting an upfront expectation that these awards will have an eight-year performance period, except in limited circumstances.

 

 

  In January 2015, we granted LTIP awards to each of our NEOs with initial notional values as follows: $7.0 million (Mr. Blankfein); $6.7 million (Messrs. Cohn, Harvey Schwartz and Sherwood); and $4.0 million (Mr. Mark Schwartz). The structure, terms and metrics of these LTIP awards are generally consistent with prior LTIP awards.  

 

  ¡  

Sound Compensation Practices. Our Compensation Committee considers our firm’s safety and soundness in making all executive compensation determinations. We have no guaranteed payments or other severance or “golden parachute” payments for executive officers.

 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      7   


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2015 Stock Incentive Plan Highlights (see Item  3 beginning on page 67)

 

Key Facts

  ¡  

We are seeking shareholder approval for a new equity plan one year prior to the expiration of our existing plan as a matter of prudence.

 

 

  ¡  

Equity-based awards play a fundamental role in aligning our compensation program with the interests of our shareholders and the requirements of our regulators. We believe a substantial portion of variable pay should be delivered in equity, rather than cash, which also reinforces our long-term risk-management orientation. Accordingly, our Compensation Committee believed it was appropriate to seek shareholder approval for renewal of the plan one year in advance of expiration.

 

 

  ¡  

The terms of our new equity plan are unchanged from those previously approved by our shareholders, other than (1) an increase of 50 million in the number of shares authorized for issuance under the plan and (2) an extension of the term of the plan through our 2019 Annual Meeting (i.e., an additional three years). This proposed share increase is consistent with, and based on the same award assumptions that we used in setting the number of shares available for grant under, our shareholder-approved 2013 equity plan.

 

 

  ¡  

We generally expect to continue this prudent approach of submitting our equity plan for shareholder approval one year prior to expiration.

 

 

  ¡  

We believe our equity plan should be viewed in the context of our disciplined and thoughtful management of compensation expenses (see page 4 ).

 

 

Information on our Burn Rate

 

  ¡  

We understand many shareholders look at burn rate or other similar metrics when assessing equity plan proposals.

 

 

  ¡  

We believe our active capital management and focus on equity in our compensation framework provide significant value to our shareholders, despite the impact on our burn rate calculations.

 

 

  ¡  

Burn rate is calculated as the number of equity-based awards granted under our equity plan in a given year divided by the weighted average basic share count in that year.

 

 

LOGO

 

  1 

Based on weighted average basic share count used in the calculation of basic earnings per common share and grants of equity-based awards as reported in public filings. GS weighted average basic share count includes common shares outstanding and restricted stock units granted to employees with no future service requirements. Calculation methodologies for U.S. peers may vary.

 
  2 

C based on grants of unvested share-based awards disclosed in Form 10-K.

 

 

  8      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

 

Three-Year Average Burn Rate1 (2012-2014) (Calculated based on public filings)


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  ¡  

Our burn rate is high relative to our peers and the broader industry because of the following factors:

 

  Broad-based participation. We grant equity-based awards (which would otherwise be delivered in cash) to a significant number of our employees; equity-based awards represent a larger portion of our compensation expense than for any of our U.S. peers (BAC, C, JPM or MS).

 

  Peer share count growth. Many peers have significantly increased their weighted average basic share count due to share issuances and lower share repurchase amounts (see below). This inflates the denominator of the burn rate calculation and results in a lower peer average burn rate.

 

  Our share buybacks. Our history of managing capital through our share buyback program has been favorable for shareholders, even though it has increased our burn rate.

 

LOGO

 

  1 

Based on weighted average basic share count used in the calculation of basic earnings per common share. GS weighted average basic share count includes common shares outstanding and restricted stock units granted to employees with no future service requirements. Calculation methodologies for U.S. peers may vary.

 

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      9   

% Change in Weighted Average Basic Share Count1 (2007-2014) (Calculated based on public filings) Our strong track record of managing our capital is indicated by a weighted average basic share count that is only 6% higher than our full year record low in 2007; most of our peers have seen significant weighted average basic share count increases over the same period.


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Corporate Governance Highlights (see Corporate Governance beginning on page 14)

 

Our Board

 

¡   We strive to maintain a well-rounded and diverse Board that balances both financial industry expertise and independence and the institutional knowledge of longer-tenured directors with the fresh perspectives brought by newer directors.

¡   We have a robust onboarding process for our new directors, which includes a multi-part orientation session about our business, strategy, governance and Board.

¡   Recent changes in our Board roles and composition:

  

LOGO

–  Adebayo Ogunlesi became our Lead Director in July 2014 and has embraced this new role, working with our Board to oversee the implementation of recent governance changes described below

 

  

–  Michele Burns succeeded Mr. Ogunlesi as Chair of our Risk Committee in July 2014

 

  

–  Peter Oppenheimer joined our Board as an independent director in March 2014 and succeeded Ms. Burns as Chair of our Audit Committee in July 2014

 

  

–  Mark Flaherty joined our Board as an independent director in December 2014, also joining our Audit, Risk and Corporate Governance and Nominating (Governance) Committees

 

  

–  Mark Winkelman joined our Board as an independent director in December 2014, also joining our Audit, Risk and Governance Committees

 

  

–  Director Retirement: After approximately 12 years of dedicated service on our Board, Claes Dahlbäck determined not to stand for re-election at our 2015 Annual Meeting. We are grateful for his many contributions and unfailing commitment to our Board and our firm. We are pleased we will continue to benefit from his insights through his continued service as a director of Goldman Sachs International.

 

LOGO

 

  10      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

Remembering our colleague and friend, James J. Schiro With great sadness, in 2014 we mourned the passing of our esteemed colleague and dear friend, Jim Schiro. As our Lead Director, Jim was a vocal advocate for sound governance practices, and was firmly committed to shareholder engagement. Our firm benefited greatly from his valuable contributions, judgment and insights and he will be remembered by all who knew him for the example he set as a leader of our firm.


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Director Nominees

 

     Name/Age   Independent  

Director

Since

 

Occupation/

Career Highlights

 

Committee

Membership

  Other Public
Company
Boards

LOGO

  Lloyd Blankfein, 60
Chairman
  No   April 2003   Chairman & CEO,
The Goldman Sachs Group, Inc.
  None
  0

LOGO

  Adebayo Ogunlesi, 61
Lead Director
  Yes   October 2012   Chairman & Managing Partner, Global Infrastructure Partners   Governance (Chair)
Ex-Officio Member all other Committees
  2

LOGO

  Michele Burns, 57   Yes   October 2011  

Retired, Chairman & CEO, Mercer LLC Retired, CFO of each of:

Marsh & McLennan Companies, Inc., Mirant Corp. and Delta Air Lines, Inc.

 

Compensation
Governance

Risk (Chair)

  2

LOGO

  Gary Cohn, 54   No   June 2006   President & COO,
The Goldman Sachs Group, Inc.
  None
  0

LOGO

  Mark Flaherty, 55   Yes   December 2014   Retired, Vice Chairman,
Wellington Management Company
  Audit
Governance
Risk
  0

LOGO

  William George, 72   Yes   December 2002   Senior Fellow,
Harvard Business School
  Compensation
Governance
Public Responsibilities (Chair)
  1

LOGO

  James Johnson, 71   Yes   May 1999   Chairman, Johnson Capital Partners   Compensation (Chair)
Governance
Public Responsibilities
  2

LOGO

  Lakshmi Mittal, 64   Yes   June 2008   Chairman & CEO,
ArcelorMittal S.A.
  Compensation
Governance
Public Responsibilities
  1

LOGO

  Peter Oppenheimer, 52   Yes   March 2014   Retired, Senior Vice President and CFO, Apple, Inc.   Audit (Chair)
Governance
Risk
  0

LOGO

  Debora Spar, 51   Yes   June 2011   President, Barnard College   Compensation
Governance
Public Responsibilities
  0

LOGO

  Mark Tucker, 57   Yes   November 2012  

Executive Director, Group

Chief Executive & President,
AIA Group Limited

  Audit
Governance
Risk
  0

LOGO

  David Viniar, 59   No   January 2013   Retired, CFO,
The Goldman Sachs Group, Inc.
  Risk
  0

LOGO

  Mark Winkelman, 68   Yes   December 2014   Private investor   Audit
Governance
Risk
  1

 

Recent Changes to Our Committee Structure

 

  ¡  

Since our IPO, each of our independent directors has served on each of our standing committees. While this common knowledge base has served us well, given that the number of our standing committees has increased and the size of our Board has expanded, our Lead Director initiated a review of our committee structure.

 

 

  ¡  

As a result, our independent directors determined that it would be in the best interests of our firm and our shareholders to decrease the number of directors serving on each of our Audit, Risk and Compensation Committees.

 

 

  ¡  

This change allows our Board to better harness specific director skill sets and permits directors to deepen their focus on committee matters.

 

 

  ¡  

In addition, we converted the Public Responsibilities Subcommittee to a standing committee, reflecting the importance of these matters.

 

 

  ¡  

For more information on our committee structure changes, see page 24.

 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      11   


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Commitment of Our Board – 2014 Meetings

 

      Director Nominees     

Percentage of Independent

Director Nominees

   2014 Meetings          

Board

     13         77%      14       

 

54 total

Board and

Committee

meetings

in 2014

Audit

     4       100%      13       

Compensation

     5       100%      9       

Governance

     10       100%      8       

Risk

     6       83%      6       

Public Responsibilities

     4       100%      4       

Executive Sessions of Independent Directors

                15*       
  *

Includes 5 executive sessions of our independent directors chaired by our Lead Director and 10 additional sessions led by the chairs of our Audit, Risk and/or Compensation Committees during which our independent directors met without management present.

 

 

  ¡  

In addition to formal Board and Committee meetings, our Committee Chairs and Lead Director meet and speak regularly with each other and with members of our management, as well as meet with our regulators, meeting in 2014 over 200 times in the aggregate.

 

 

Foundation in Sound Governance Practices

 

 

  ¡  

Recently Enhanced: Process regarding succession for Board leadership positions.

 

 

  ¡  

Recently Enhanced: Annual Board and Committee evaluations, which incorporate feedback on individual director performance.

 

 

  ¡  

Recently Enhanced: Focus of our independent directors on executive succession planning.

 

 

  ¡  

Independent Lead Director with expansive duties.

 

 

  ¡  

Frequent executive sessions of independent directors.

 

 

  ¡  

Comprehensive process for Board refreshment, including a focus on diversity.

 

 

  ¡  

Candid, one-on-one discussions between the Lead Director and each non-employee director supplementing formal evaluations.

 

 

  ¡  

Shareholders are welcome to recommend director candidates to our Governance Committee.

 

 

  ¡  

CEO evaluation process conducted by our Lead Director with our Governance Committee.

 

 

  ¡  

Board committee oversight of environmental, social and governance (ESG) matters, including online ESG Report.

 
  ¡  

Directors may contact any employee of our firm directly, and the Board and its committees may engage independent advisors at their sole discretion.

 

 

  ¡  

Annual elections of directors (i.e., no staggered board).

 

 

  ¡  

Majority voting with resignation policy for directors in uncontested elections.

 

 

  ¡  

Shareholders holding at least 25% of our outstanding shares of Common Stock can call a special meeting.

 

 

  ¡  

No supermajority vote requirements in our charter or by-laws.

 

 

  ¡  

Director share ownership requirement of 5,000 shares or RSUs, with a transition period for new directors.

 

 

  Directors may not hedge shares of Common Stock; none of our directors has shares of Common Stock subject to a pledge.

 

  All RSUs granted as director compensation must be held for the director’s entire tenure on our Board. Directors are not permitted to hedge, pledge, or transfer these RSUs.
 

 

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Commitment to Year-Round Active Engagement with Our Shareholders

 

  ¡  

Across our shareholder base, there are a wide variety of viewpoints about the corporate governance issues affecting our firm. We, including our Lead Director, meet and speak with our shareholders and other key constituents throughout the year.

 

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      13   


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Corporate Governance

 

Item 1. Election of Directors

 

After a review of the individual qualifications and experience of each of our director nominees and his or her contributions to our Board, our Board determined unanimously to recommend that shareholders vote FOR all of our director nominees.

 

Our Directors

Board of Directors’ Qualifications and Experience

Our 13 director nominees have a great diversity of experience and bring to our Board a wide variety of skills, qualifications and viewpoints that strengthen their ability to carry out their oversight role on behalf of shareholders.

Diversity is an important factor in our consideration of potential and incumbent directors.

 

  ¡  

Among the factors the Governance Committee considers in identifying and evaluating a potential director candidate is the extent to which the candidate would add to the diversity of our Board. The Committee considers the same factors in determining whether to re-nominate an incumbent director.

 

  ¡  

Diversity is also considered as part of the annual Board evaluation.

 

Our Governance Committee considers a number of demographics including race, gender, ethnicity, sexual orientation, culture and nationality, seeking to develop a board that, as a whole, reflects diverse viewpoints, backgrounds, skills, experiences and expertise.

 

LOGO

Given the nature of our business, our Governance Committee continues to believe that directors with current and prior financial industry experience, among other skills, are critical to an effective Board. We take very seriously, however, any actual or perceived conflicts of interest that may arise, and have taken various steps to address this.

For example, in addition to our policies on director independence and related person transactions, we maintain a policy with respect to outside director involvement with financial firms, such as private equity firms or hedge funds. Under this policy, in determining whether to approve any current or proposed affiliation of a non-employee director with a financial firm, our Board will consider, among other things, the legal, reputational, operational and business issues presented, and the nature, feasibility and scope of any restrictions, procedures or other steps that would be necessary or appropriate to ameliorate any perceived or potential future conflicts or other issues.

 

  14      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

 

Diversity of Skills and Experiences Represented on our Board Financial industry Complex industries Risk management Reputational considerations Corporate governance Global experience Technology Accounting & preparation of financial statements Compliance Core Qualifications and Experiences All of our Director Nominees Possess Integrity, business judgment and commitment Demonstrated management ability Extensive experience in the public, private or not-for-profit sectors Leadership and expertise in their respective fields Financial literacy Active involvement in educational, charitable and community organizations Strategic thinking Operations Established & growth markets Credit evaluation Environmental, social & governance Human capital management Academia Business ethics Government, public policy & regulatory affairs


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LOGO

Each of our director nominees has been recommended for election by our Governance Committee and approved and nominated for election by our Board. With respect to their appointment in December 2014, Messrs. Flaherty and Winkelman were recommended to our Lead Director and our Governance Committee by the Committee’s independent director search firm.

If elected by our shareholders, our director nominees, all of whom are currently members of our Board, will serve for a one-year term expiring at our 2016 Annual Meeting of Shareholders. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal.

All of our directors must be elected by majority vote of our shareholders.

 

  ¡  

A director who fails to receive a majority of FOR votes will be required to tender his or her resignation to our Board.

 

 

  ¡  

Our Governance Committee will then assess whether there is a significant reason for the director to remain on our Board, and will make a recommendation to our Board regarding the resignation.

 

For detailed information on the vote required for the election of directors and the choices available for casting your vote, please see Frequently Asked Questions.

Biographical information about our director nominees follows. This information is current as of April 1, 2015 and has been confirmed by each of our director nominees for inclusion in our Proxy Statement. There are no family relationships between any of our directors or executive officers.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      15   

 

Comprehensive Re-Nomination Process We appreciate the importance of critically evaluating individual directors and their contributions to our Board in connection with re-nomination decisions. In considering whether to recommend re-nomination of a director for election at our Annual Meeting, the Governance Committee conducts a detailed review, considering factors such as: a The extent to which the director’s skills, qualifications and experience continue to contribute to the success of our Board; a Feedback from the annual board evaluation and individual discussions between each non-employee director and our Lead Director; a Attendance and participation at, and preparation for, Board and Committee meetings; a Independence; a Shareholder feedback, including the strong support received by director nominees elected at our 2014 Annual Meeting of Shareholders; a Outside board and other affiliations, including any actual or perceived conflicts of interest; and a The extent to which the director continues to contribute to the diversity of our Board.


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LOGO

 

Lloyd C. Blankfein, 60

Chairman and CEO

 

Director Since: April 2003

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

¡   Committed and deeply engaged leader with strong communication skills: Over 30 years of experience in various positions across our firm. Mr. Blankfein utilizes this firm-specific knowledge and experience in his role as Chairman and CEO to, among other things, lead the firm and its people, help protect and enhance our culture and articulate a vision of the firm’s strategy. Mr. Blankfein also uses strong communication skills to guide Board discussions and keeps our Board apprised of significant developments in our business and industry

 

¡   Extensive market and industry knowledge: Leverages extensive familiarity with all aspects of the firm’s industry and business, including our risk management practices and strategy

 

¡   Face of our firm: Drawing from extensive interaction with our clients, investors and other constituents, provides additional perspective to the Board

 

 

 

Career Highlights

¡    Goldman Sachs

 

–  Chairman and Chief Executive Officer (June 2006 – Present)

 

–  President and Chief Operating Officer (January 2004 – June 2006)

 

–  Vice Chairman with management responsibility for Fixed Income, Currency and Commodities (FICC) and Equities Divisions (April 2002 – January 2004)

 

–  Co-head of FICC (1997 – April 2002)

 

–  Head and/or Co-head of the Currency and Commodities Division (1994 – 1997)

 

Other Professional Experience and Community Involvement

 

¡   Member, Dean’s Advisory Board, Harvard Law School

 

¡   Member, Board of Dean’s Advisors, Harvard Business School

 

¡   Member, Dean’s Council, Harvard University

 

¡   Member, Advisory Board, Tsinghua University School of Economics and Management

 

¡   Member, Board of Overseers, Weill Cornell Medical College

 

¡   Member, Board of Directors, Partnership for New York City

 

 

LOGO

 

Adebayo O. Ogunlesi, 61

Lead Director

 

Director Since: October 2012

 

GS Committees

Governance (Chair)

Ex-officio member:

Audit

Compensation

Public Responsibilities

Risk

 

Other Public Company Directorships

Current: Callaway Golf Company and Kosmos Energy Ltd.

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

¡   Strong leader, including leadership experience in the financial services industry: Founder, Chairman and Managing Partner of Global Infrastructure Partners and a former executive of Credit Suisse with over 20 years of experience in the financial services industry, including investment banking and private equity

 

¡   International business and global capital markets experience, including emerging markets: Advised and executed transactions and provided capital markets strategy advice globally

 

¡   Knowledge gained as former Chair of our Risk Committee: Provides additional perspective on key risks facing our firm

 

¡   Expertise regarding governance and compensation: Service on the boards of directors and board committees of other public companies and not-for-profit entities, and in particular as Chair of the nominating and corporate governance committees at each of Callaway Golf and Kosmos Energy, provides additional governance perspective

 

 

 

Career Highlights

 

¡   Chairman and Managing Partner, Global Infrastructure Partners, a private equity firm that invests worldwide in infrastructure assets in the energy, transport, water and waste industry sectors (July 2006 – Present)

 

¡    Credit Suisse, a financial services company

 

–  Executive Vice Chairman and Chief Client Officer (2004 – 2006)

 

–  Member of Executive Board and Management Committee (2002 – 2006)

 

–  Head of Global Investment Banking Department (2002 – 2004)

 

–  Head of Global Energy Group (1997 – 2002)

 

–  Various positions (1983 – 1997)

 

Other Professional Experience and Community Involvement

 

¡   Member, Board of Trustees, NewYork-Presbyterian Hospital

 

¡   Member, National Board of Directors, The NAACP Legal Defense and Educational Fund, Inc.

 

¡   Member, Advisory Board, Smithsonian National Museum of African Art

 

¡   Member, Board of Directors, Partnership for New York City Fund

 

¡   Member, Harvard University Global Advisory Council and Harvard Law School Leadership Council of New York

 

¡   Law Clerk to the Honorable Thurgood Marshall, Associate Justice of the United States Supreme Court (1980 – 1981)

 

 

  16      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  


Table of Contents

 

LOGO

 

M. Michele Burns, 57

 

Director Since: October 2011

 

GS Committees

Risk (Chair)

Compensation

Governance

 

Other Public Company

Directorships

Current: Cisco Systems, Inc., Alexion Pharmaceuticals, Inc., and Etsy, Inc. (IPO pending)

 

Past 5 Years: Wal-Mart Stores,

Inc.

 

Key Experience and Qualifications

 

 

¡   Leadership, governance and risk expertise: Leverages service on the boards of directors and board committees of other public companies and not-for-profit entities

 

¡   Accounting and the review and preparation of financial statements: Garnered expertise as former CFO of several global public companies

 

¡   Human capital management and strategic consulting: Background gained as former CEO of Mercer LLC

 

¡   Knowledge gained as the former Chair of our Audit Committee: Provides additional perspective on our Board’s audit oversight responsibilities

 

 

 

Career Highlights

 

¡   Chief Executive Officer, Retirement Policy Center, sponsored by Marsh & McLennan Companies, Inc. (MMC); Retirement Policy Center focuses on retirement public policy issues (October 2011 – February 2014)

 

¡    Chairman and Chief Executive Officer, Mercer LLC, a subsidiary of MMC and a global leader in human resource consulting, outsourcing and investment services (September 2006 – early October 2011)

 

¡   Chief Financial Officer, MMC, a global professional services and consulting firm (March 2006 – September 2006)

 

¡   Chief Financial Officer, Chief Restructuring Officer and Executive Vice President, Mirant Corporation, an energy company (May 2004 – January 2006)

 

¡    Executive Vice President and Chief Financial Officer, Delta Air Lines, Inc., an air carrier, which filed for protection under Chapter 11 of the United States Bankruptcy Code in September 2005 (including various other positions, 1999 – April 2004)

 

¡   Senior Partner and Leader, Southern Regional Federal Tax Practice, Arthur Andersen LLP, an accounting firm (including various other positions, 1981 – 1999)

 

Other Professional Experience and Community Involvement

 

¡    Center Fellow and Strategic Advisor, Stanford University Center on Longevity

 

¡    Board member and Treasurer, Elton John AIDS Foundation

 

LOGO

 

Gary D. Cohn, 54

President and COO

 

Director Since: June 2006

 

Other Public Company Directorships

Current: None

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

¡   Broad experience across our firm: More than 20-year career at Goldman Sachs in New York and London with extensive experience across different markets. Mr. Cohn utilizes this experience to, among other things, assist the Board in its oversight of our firm’s strategy and business priorities

 

¡   Insight into the firm’s various business lines and day-to-day operations: Serves as our President and Chief Operating Officer helping to execute our firm’s strategy and client engagement

 

¡   Chair of our Firmwide Client and Business Standards Committee: Expertise with respect to our client relationships, business standards and reputational risk management, which assists our Public Responsibilities Committee in its oversight responsibilities

 

 

 

Career Highlights

¡    Goldman Sachs

 

–  President and Chief Operating Officer (or Co-Chief Operating Officer) (June 2006 – Present)

 

–  Co-Head of global Securities businesses (December 2003 – June 2006)

 

–  Co-Head of FICC (September 2002 – December 2003)

 

–  Co-Chief Operating Officer of FICC, Head of Commodities and other FICC businesses (variously, 1999 – 2002)

 

–  Head of Commodities (1996 – 1999)

 

Other Professional Experience and Community Involvement

 

¡   Trustee, American University

 

¡   Trustee, NYU Langone Medical Center

 

¡   Chairman, Advisory Board, NYU Hospital for Joint Diseases

 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      17   


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LOGO

 

Mark Flaherty, 55

 

Key Experience and Qualifications

 

 

¡   Investment management: Leverages over 20 years of experience in the investment management industry

 

¡   Background provides perspective on institutional investors’ approach to company performance and corporate governance

 

¡   Corporate governance and leadership: Service on the boards of trustees and board committees of not-for-profit entities assists in Governance Committee responsibilities

 

 

Director Since: December 2014

 

GS Committees

Audit

Governance

Risk

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

 

Career Highlights

 

¡   Wellington Management Company, an investment management company

 

–  Vice Chairman (2011 – 2012)

 

–  Director of Global Investment Services (2002 – 2012)

 

–  Partner, Senior Vice President (2001 – 2012)

 

¡   Standish, Ayer and Wood, an investment management company

–  Executive Committee Member (1997 – 1999)

 

–  Partner (1994 – 1999)

 

–  Director, Global Equity Trading, (1991 – 1999)

 

¡   Director, Global Equity Trading, Aetna, a diversified healthcare benefit company (1987 – 1991)

 

Other Professional Experience and Community Involvement

 

¡   Member, Board of Trustees, Providence College

 

¡   Member, Board of Trustees, The Newman School

 

 

LOGO

 

William W. George, 72

  Key Experience and Qualifications
 

 

¡   Focus on reputation and environmental, social and governance matters: Utilizes current and prior service on the boards of directors and board committees of several other public companies and not-for-profit entities, particularly as Chair of our Public Responsibilities Committee

 

¡   Leadership: Served as Chief Executive Officer and Chairman of Medtronic, Inc. and as a senior executive at Honeywell International Inc.

 

¡   Organizational behavior and management: A senior fellow, former professor of management practice at Harvard Business School and author of books on leadership, which provides academic expertise in business management and corporate governance

 

 

Director Since: December 2002

 

GS Committees

Public Responsibilities (Chair)

Compensation

Governance

 

Other Public Company

Directorships

Current: Exxon Mobil Corporation

 

Past 5 Years: None

 

 

Career Highlights

 

¡   Harvard Business School

 

–  Senior Fellow (July 2014 – present)

 

–  Professor of Management Practice (January 2004 – July 2014)

¡   Medtronic, Inc., a medical technology company

 

–  Chairman (April 1996 – April 2002)

 

–  Chief Executive Officer (May 1991 – May 2001)

 

–  President and Chief Operating Officer (1989 – 1991)

 

¡   Executive Vice President, Honeywell International Inc., a diversified technology and manufacturing company (1978 – 1989)

 

Other Professional Experience and Community Involvement

 

¡   Board member, World Economic Forum USA

 

¡   Trustee, Mayo Clinic

 

¡   Director, Destination Medical Center Corporation

 

¡   Member, National Academy of Engineering

   

 

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LOGO

 

James A. Johnson, 71

 

Key Experience and Qualifications

 

 

¡   Financial services, including investment management industry: Leverages professional experience in financial services

 

¡   Government affairs and the regulatory process: Gained through, among other things, his tenure at Fannie Mae and his work with Vice President Walter F. Mondale

 

¡   Leadership, compensation and governance: Service on the boards of directors of public companies and not-for-profit entities, including in lead director and committee chair roles, provides additional perspective

 

 

Director Since: May 1999

 

GS Committees

Compensation (Chair)

Governance

Public Responsibilities

 

Other Public Company

Directorships

Current:  Forestar Group Inc. and Target Corporation

 

Past 5 Years:  None

 

 

Career Highlights

 

¡   Chairman, Johnson Capital Partners, a private consulting company (Present)

 

¡   Vice Chairman, Perseus L.L.C., a merchant banking and private equity firm (April 2001 – June 2012)

 

¡   Fannie Mae

 

–  Chairman of the Executive Committee (1999)

 

–  Chairman and Chief Executive Officer (February 1991 – 1998)

 

–  Vice Chairman (1990 – February 1991)

 

Other Professional Experience and Community Involvement

 

¡   Chairman Emeritus, John F. Kennedy Center for the Performing Arts

 

¡   Member, Council on Foreign Relations

 

¡   Member, American Academy of Arts and Sciences

 

¡   Member and Treasurer, American Friends of Bilderberg

 

¡   Chairman Emeritus and Executive Committee Member, The Brookings Institution

 

¡   Council Member, Smithsonian Museum of African American History and Culture

 

¡   Chair, Advisory Council, Stanford University Center on Longevity

 

 

LOGO

 

Lakshmi N. Mittal, 64

  Key Experience and Qualifications
 

¡   Leadership, business development and operations: Founder of Mittal Steel Company and Chairman and Chief Executive Officer of ArcelorMittal S.A., the world’s leading integrated steel and mining company

 

¡   International business and growth markets: Leading company with operations in over 20 countries on four continents provides global business expertise

 

¡   Corporate governance and international governance: Current and prior service on the boards of directors of other international public companies and not-for-profit entities assists in Governance Committee responsibilities

 

 

Director Since: June 2008

 

GS Committees

Compensation

Governance

Public Responsibilities

 

Other Public Company

Directorships

Current:  ArcelorMittal S.A.

 

Past 5 Years: ICICI Bank Limited

 

 

Career Highlights

 

¡   ArcelorMittal S.A., a steel and mining company

 

–  Chairman and Chief Executive Officer (May 2008 – Present)

 

–  President and Chief Executive Officer (November 2006 – May 2008)

 

¡   Chief Executive Officer, Mittal Steel Company N.V. (1976 – November 2006)

 

Other Professional Experience and Community Involvement

 

¡   Member, International Business Council of the World Economic Forum

 

¡   Board of Trustees, Cleveland Clinic

 

¡   Member, Executive Committee, World Steel Association

 

¡   Member, Executive Board, Indian School of Business

     

 

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LOGO

 

Peter Oppenheimer, 52

 

Director Since: March 2014

 

GS Committees

Audit (Chair)

Governance

Risk

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

 

Key Experience and Qualifications

 

 

¡   Capital and risk management: Garnered experience as CFO and Controller at Apple and Divisional CFO at ADP

 

¡   Review and preparation of financial statements: Over 20 years as a CFO or controller provides valuable experience and perspective as Audit Committee Chair

 

¡   Oversight of technology and technology risks: Leverages prior experience in overseeing information systems at Apple

 

¡   Corporate governance and leadership: Service on the boards of directors of not-for profit entities provides additional perspective on governance

 

 

 

Career Highlights

 

¡   Apple, Inc., a designer and manufacturer of electronic devices and related software and services

 

–  Senior Vice President (retired September 2014)

 

–  Senior Vice President and Chief Financial Officer (2004 – June 2014)

 

–  Senior Vice President and Corporate Controller (2002 – 2004)

 

–  Vice President and Corporate Controller (1998 –2002)

 

–  Vice President and Controller, Worldwide Sales (1997 – 1998)

 

–  Senior Director, Finance and Controller, Americas (1996 – 1997)

 

¡   Divisional Chief Financial Officer, Finance, MIS, Administration, and Equipment Leasing Portfolio at Automatic Data Processing, Inc. (ADP), a leading provider of human capital management and integrated computing solutions (1992 – 1996)

 

¡   Consultant, Information Technology Practice at Coopers & Lybrand, LLP (1988 – 1992)

 

Other Professional Experience and Community Involvement

 

¡   Vice Chairman, Foundation Board of Directors, California Polytechnic State University Foundation

 

¡   Member, Board of Directors, Sacred Heart Schools, Atherton, California

 

 

LOGO

 

Debora L. Spar, 51

 

Director Since: June 2011

 

GS Committees

Compensation

Governance

Public Responsibilities

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

 

Key Experience and Qualifications

 

 

¡   Government and public policy, including the international political economy and growth markets: Experience as former professor at Harvard Business School provides perspective to our Public Responsibilities Committee

 

¡   Leadership and institutional management: President of Barnard College and an author of numerous books provides additional viewpoints

 

¡   Corporate governance: Service on the boards of directors of not-for-profit entities assists in Governance Committee responsibilities

 

 

 

Career Highlights

 

¡   President, Barnard College (July 2008 – Present)

 

¡   Harvard Business School (1991 – 2008), various positions, including:

 

–  Spangler Family Professor of Business Administration

 

–  Senior Associate Dean; Director, Division of Research and Faculty Development

 

–  Professor of Business, Government and Competition; Chair, Business, Government and the International Economy Unit

 

Other Professional Experience and Community Involvement

 

¡    Member, Board of Directors, Markle Foundation

 

¡    Member, Board of Directors, The Wallace Foundation

 

¡    Member, American Academy of Arts & Sciences

 

¡    Member, Council on Foreign Relations

 

 

 

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LOGO

 

Mark E. Tucker, 57

 

Director Since: November 2012

 

GS Committees

Audit

Governance

Risk

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

 

¡   Financial services industry, including insurance, international business and global capital markets, particularly the Asia-Pacific region: Garnered through executive positions at AIA Group, Prudential plc and HBOS plc

 

¡   Government and regulatory affairs, particularly regarding the financial system: Leverages prior experience as a non-executive director on The Court of The Bank of England and member of its Audit and Risk and Financial Stability Committees

 

¡   Risk management: Experience in insurance and financial services industries, including prior service on The Court of The Bank of England, provides perspective to our Risk Committee

 

 

 

Career Highlights

¡    AIA Group Limited (AIA Group), a life insurance group in the Asia Pacific region

 

–  Executive Director, Group Chief Executive and President, AIA Group (January 2011 – Present)

 

–  Chairman (February 2011 – Present) and Chief Executive Officer (August 2013 – Present), AIA Company Limited

 

–  Chairman (February 2011 – Present) and Chief Executive Officer (August 2013 – Present), AIA International Limited

 

–  Group Executive Chairman and Group Chief Executive Officer, AIA Group (October 2010 – December 2010)

 

¡   Group Chief Executive and Executive Director, Prudential plc, an international financial services group (2005-2009, and various other positions 1986 – 2003)

 

¡    Group Finance Director, HBOS plc, a banking and insurance company in the United Kingdom (2004 – 2005)

 

Other Professional Experience and Community Involvement

 

¡   Former Non-Executive Director, The Court of The Bank of England

 

¡   Former Director, Edinburgh International Festival

 

LOGO

 

David A. Viniar, 59

 

Director Since: January 2013

 

GS Committees

Risk

 

Other Public Company

Directorships

Current: None

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

¡   Financial industry, in particular risk management and regulatory affairs: Over 30 years of experience in various roles at Goldman Sachs provides valuable perspective to our Board

 

¡   Unique insight into our firm’s financial reporting, controls and risk management: As our former CFO, able to provide unique insight about our risks to our Risk Committee

 

¡   Capital management processes and assessments: Experience gained through serving as the Goldman Sachs CFO for over 10 years

 

 

 

Career Highlights

 

¡   Goldman Sachs

 

–  Executive Vice President and Chief Financial Officer (May 1999 – January 2013)

 

–  Head of Operations, Technology, Finance and Services Division (December 2002 – January 2013)

 

–  Head of the Finance Division and Co-head of Credit Risk Management and Advisory and Firmwide Risk (December 2001 – December 2002)

 

–  Co-head of Operations, Finance and Resources (March 1999 – December 2001)

 

Other Professional Experience and Community Involvement

 

¡   Director, Square, Inc.

¡    Former Trustee, Union College

 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      21   


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LOGO

 

Mark O. Winkelman, 68

 

Director Since: December 2014

 

GS Committees

Audit

Governance

Risk

 

Other Public Company

Directorships

Current: Anheuser-Busch InBev

 

Past 5 Years: None

 

Key Experience and Qualifications

 

 

¡   Audit and financial expertise, corporate governance and leadership: Leverages service on the board of directors and the audit and finance committees of Anheuser-Busch InBev and on the boards of directors and audit, finance and other committees of not-for-profit entities

 

¡   Financial services industry: Experience gained through his role as operating partner at J.C. Flowers
and through other industry experience

 

¡   Knowledge about our firm, including our fixed income business, and an understanding of the risks we face: Utilizes his previous tenure at Goldman Sachs

 

 

 

Career Highlights

 

¡   Private investor (Present)

 

¡   Operating Partner, J.C. Flowers & Co., a private investment firm focusing on the financial services industry (2006 – 2008)

 

¡   Goldman Sachs

 

–  Retired Limited Partner (1994 – 1999)

 

–  Management Committee Member and Co-Head of Fixed Income Division (1987 – 1994)

 

–  Various positions at the firm, including Head of J. Aron Division (1978 – 1987)

 

¡   Senior Investment Officer, The World Bank (1974 – 1978)

 

Other Professional Experience and Community Involvement

 

¡   Trustee, University of Pennsylvania

 

¡   Chairman of the Board, Penn Medicine

 

 

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Independence of Directors

 

10 of our 13 director nominees are independent

A director is considered independent under NYSE rules if our Board determines that the director does not have any direct or indirect material relationship with Goldman Sachs. Our Board has established a Policy Regarding Director Independence (Director Independence Policy) that provides standards to assist our Board in determining which relationships and transactions might constitute a material relationship that would cause a director not to be independent.

Our Board determined, upon the recommendation of our Governance Committee, that Ms. Burns, Mr. Flaherty, Mr. George, Mr. Johnson, Mr. Mittal, Mr. Ogunlesi, Mr. Oppenheimer, Dr. Spar, Mr. Tucker and Mr. Winkelman, as well as Mr. Dahlbäck who is retiring in May 2015, are “independent” within the meaning of NYSE rules and our Director Independence Policy. Prior to his retirement from our Board in 2014, Mr. Schiro, who served as our Lead Director for a portion of the year, also was determined to be independent. Furthermore, our Board has determined that all of our independent directors satisfy the heightened audit committee independence standards under SEC and NYSE rules, and Compensation Committee members also satisfy the relevant heightened standards under NYSE rules.

Process for Independence Assessment

To assess independence, our Governance Committee and our Board were provided with detailed information about any relationships between the independent directors (and their immediate family members and affiliated entities) on the one hand, and Goldman Sachs and its affiliates on the other. Specifically, our Governance Committee and our Board reviewed and considered the following categories of transactions, which our Board has determined are immaterial under our Director Independence Policy. For more detail on certain of these transactions, see Certain Relationships and Related Transactions as well as Additional Details on Director Independence in Annex A.

 

  ¡  

Ordinary course business transactions between us and an entity where a director or immediate family member is or was during 2014:

 

  An executive officer or employee of a for-profit entity – Burns, Dahlbäck (a family member), George (a family member), Mittal (and family members), Ogunlesi, Oppenheimer and Tucker;

 

  A non-executive board member or a similar position of a for-profit entity – Burns, Dahlbäck, George, Johnson, Mittal (and family members), Ogunlesi and Winkelman;

 

  A less than 5% equity holder or limited partner and an investment advisor, advisory director or similar position – Dahlbäck; and

 

  An executive officer, employee, trustee, board member or similar position of a not-for-profit organization – Burns, Dahlbäck, George (and family members), Johnson, Mittal (and family members), Ogunlesi (and a family member), Spar and Winkelman.

 

  ¡  

Charitable donations made in the ordinary course (including pursuant to our matching gift program) by the firm, The Goldman Sachs Foundation or the donor advised funds under our Goldman Sachs Gives program (GS Gives) to a not-for-profit organization where the director or immediate family member is an employee, trustee, board member or has a similar position – Burns, Flaherty, George (and a family member), Johnson, Mittal (and family members), Ogunlesi (and a family member), Oppenheimer, Spar and Winkelman.

 

  ¡  

Client relationships where the director or an immediate family member is our client (for example, brokerage, discretionary and other similar accounts) on substantially the same terms as similarly-situated clients – Burns (and a family member), George (and family members), Mittal (and family members), Ogunlesi (and a family member), Spar (and a family member), Tucker and Winkelman (and family members).

 

  ¡  

Fund investments by a director, on substantially the same terms as similarly-situated clients, in funds sponsored or managed by us – Burns, George, Mittal and Ogunlesi.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      23   


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Structure of our Board and Governance Practices

 

LOGO

 

Our Board Committees

 

2014 Review of Committee Structure

 

  ¡  

In addition to our formal Board and Committee evaluation process, during 2014 our Governance Committee, at the initiative of our Lead Director, conducted a comprehensive review of the Board’s committee structure, under which historically all independent directors served on all standing Board committees.

 

 

  This structure was effective in providing our directors with a common knowledge base.  

 

  ¡  

However, as our Board has grown in size and with the increase in the number of standing committees, our independent directors determined that a structural change would be in the best interests of our firm and our shareholders.

 

 

  ¡  

As such, to allow our Board to better harness specific director skill sets and permit directors to deepen their focus on committee matters, as well as to enable additional focus at Board meetings on firm strategy and divisional updates, effective March 5, 2015:

 

 

  The size of each of the Audit, Risk and Compensation Committees was reduced.  

 

  Each independent director will generally serve on only three committees.  

 

  Our Lead Director, who Chairs the Governance Committee, will be an ex-officio member of all other committees.  

 

  ¡  

In addition:

 

 

  We converted the Public Responsibilities Subcommittee into a standing Public Responsibilities Committee of the Board: a further acknowledgement of the important matters covered by this committee’s mandate, including reputational risk oversight and ESG matters.  

 

  All independent directors remain on the Governance Committee: permits collective focus of our independent directors on key governance practices such as board composition, CEO performance and executive succession planning.  

 

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Table of Contents

Our Committees

Our Board has five standing committees: Audit, Compensation, Governance, Public Responsibilities and Risk. Each of our committees:

 

  ¡  

Operates pursuant to a written charter (available on our website at www.gs.com/charters).

 

  ¡  

Evaluates its performance annually.

 

  ¡  

Reviews its charter annually.

 

The firm’s reputation is of critical importance. In fulfilling their duties and responsibilities, each of our standing committees and our Board considers the potential effect of any matter on our reputation.

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      25   

 

Audit All independent Peter Oppenheimer* Claes Dahlbäck Mark Flaherty Mark Tucker Mark Winkelman Adebayo Ogunlesi (ex-officio) Key Skills & Experiences Represented a Audit/Tax/Accounting a Preparation or oversight of financial statements a Compliance Key Responsibilities a Assist our Board in its oversight of our financial statements, legal and regulatory compliance, independent auditors’ qualification, independence and performance, internal audit function performance and internal controls over financial reporting. a Decide whether to appoint, retain or terminate our independent auditors. a Pre-approve all audit, audit-related, tax and other services, if any, to be provided by the independent auditors. a Appoint and oversee the work of our Director of Internal Audit and annually assess her performance and administrative reporting line. a Prepare the Audit Committee Report. * A majority of the members of our Audit Committee, including the Chair, have been determined to be “audit committee financial experts”. Compensation All independent James Johnson Michele Burns William George Lakshmi Mittal Debora Spar Adebayo Ogunlesi (ex-officio) Key Skills & Experiences Represented a Setting executive compensation a Evaluating executive and firmwide compensation programs a Human capital management Key Responsibilities a Determine and approve the compensation of our CEO and other executive officers. a Approve, or make recommendations to our Board for it to approve, our incentive, equity-based and other compensation plans. a Assist our Board in its oversight of the development, implementation and effectiveness of our policies and strategies relating to our human capital management, including: – recruiting; – retention; – career development and progression; – management succession (other than that within the purview of the Governance Committee); and – diversity and employment practices. a Prepare the Compensation Committee Report.


Table of Contents

LOGO

 

  26      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

Governance All independent Adebayo Ogunlesi Michele Burns Claes Dahlbäck Mark Flaherty William George James Johnson Lakshmi Mittal Peter Oppenheimer Debora Spar Mark Tucker Mark Winkelman Key Skills & Experiences Represented a Corporate governance a Talent development and succession planning a Public company board service Key Responsibilities a Recommend individuals to our Board for nomination, election or appointment as members of our Board and its committees. a Oversee the evaluation of the performance of our Board and our CEO. a Review, and concur with, the succession plans for our CEO and other members of senior management. a Take a leadership role in shaping our corporate governance, including developing, recommending to the Board and reviewing on an ongoing basis the corporate governance principles and practices that apply to us. a Review periodically the form and amount of director compensation and make recommendations to the Board with respect thereto. Public Responsibilities All independent William George Claes Dahlbäck James Johnson Lakshmi Mittal Debora Spar Adebayo Ogunlesi (ex-officio) Key Skills & Experiences Represented a Government and regulatory affairs a ESG a Philanthropy Key Responsibilities a Assist our Board in its oversight of our reputation and our firm’s relationships with major external constituencies. a Oversight of the development, implementation and effectiveness of our policies and strategies relating to citizenship, corporate engagement and relevant significant public policy issues. Risk Independent Michele Burns Mark Flaherty Peter Oppenheimer Mark Tucker Mark Winkelman Adebayo Ogunlesi (ex-officio) Non-independent David Viniar Key Skills & Experiences Represented a Understanding of how risk is undertaken, mitigated and controlled in complex industries a Technology a Understanding of financial products a Risk expertise Key Responsibilities a Assist our Board in its oversight of our firm’s overall risk-taking tolerance and management of financial and operational risks, including market, credit and liquidity risk. a Review and discuss with management our firm’s capital plan, regulatory capital ratios and internal capital adequacy assessment process and the effectiveness of our financial and operational risk management policies and controls.


Table of Contents

Board Leadership Structure

 

Our Current Board Leadership Structure

As a result of its most recent board leadership review in December 2014, which included feedback from our shareholders, our Governance Committee determined that continuing to combine the roles of Chairman and CEO is the most effective leadership structure for our Board and our firm at this time. If at any time our Governance Committee concludes otherwise, it will not hesitate to appoint an independent Chairman.

Among other reasons:

  ¡  

Our Board leadership structure is enhanced by the independent leadership provided by our Lead Director and independent committee chairs, the independence of our Board and the governance policies and practices in place at our firm. For example:

 

 

–  Our independent Lead Director has an expansive list of enumerated duties, including working with the Chairman to set the Board agenda, and is focused on shareholder engagement.

  

 

LOGO

–  Our Chairman and CEO and our Lead Director meet and speak with each other regularly about our Board and our firm.

  

–  Our independent committee chairs meet and speak regularly between meetings with each other and with members of our management as well as non-management employees.

  

 

  ¡  

A combined Chairman-CEO structure provides our firm with a single leader who communicates the firm’s business and strategy to our shareholders, clients, employees, regulators and the public.

 

 

  This structure demonstrates clear accountability to our shareholders, clients and others.  

 

  ¡  

Our current structure provides for enhanced communication between the Board and management, and facilitates messaging from the Board to our people.

 

 

  ¡  

Our CEO has extensive knowledge of all aspects of our current business, operations and risks, which he brings to Board discussions as Chairman.

 

 

  A combined Chairman-CEO can serve as a knowledgeable resource for our independent directors both at and between Board meetings.  

 

  Combining the roles at our firm has been effective in promulgating a strong and effective leader of the firm, particularly in times of economic challenge and regulatory change affecting our industry.  

Annual Assessment of Board Leadership Structure

Our Board does not have a policy as to whether the roles of Chairman and CEO should be separate or combined. Our Governance Committee annually assesses these roles and deliberates the merits of the Board’s leadership structure to ensure that the most efficient and appropriate structure is in place for our firm’s needs, which may evolve over time. If at any time the Chairman is not an independent director, our independent directors will appoint an independent Lead Director.

Key Components of Annual Review

 

LOGO

 

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LOGO

 

  28      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

a Chairs Board meetings. a Chairs annual shareholder meeting. a Serves as the public face of our Board and our firm. a Works with Lead Director to set agenda for Board meetings (which the Lead Director also approves) and reviews schedule for Board meetings. a Guides discussions at Board meetings and encourages directors to voice their views. a Serves as a resource for our Board. a Communicates significant business developments and time-sensitive matters to the Board. a Establishes the “tone-at-the-top” in coordination with the Board, and embodies these values for our firm. a Responsible for managing the day-to-day business and affairs of our firm. a Sets and leads the implementation of corporate policy and strategy. a Interacts regularly with our COO, CFO and other senior leadership of our firm. a Manages senior leadership of our firm. a Meets frequently with clients and shareholders, providing an opportunity to understand and respond to concerns and feedback; communicates feedback to our Board. Powers and duties of our Independent Lead Director a Provides independent leadership. a Sets agenda for Board meetings, working with our Chairman (including adding items to and approving the agenda) and approves the related materials; approves the schedule for Board and committee meetings; sets agenda and approves materials for Governance Committee meetings; approves agenda for other committee meetings (along with our other independent committee chairs, who also approve the materials for these meetings). a Engages with our other independent directors to identify matters for discussion at executive sessions of independent directors. a Presides at executive sessions of independent directors. a Advises our Chairman of any decisions reached and suggestions made at the executive sessions, as appropriate. a Calls meetings of the independent directors. a Presides at any Board meeting at which the Chairman is not present. a Facilitates communication between the independent directors and our Chairman, including by presenting the Chairman’s views, concerns and issues to the independent directors and raising to the Chairman, as appropriate, views, concerns and issues of the independent directors. a Engages with our Chairman between Board meetings and assists with informing or engaging non-employee directors, as appropriate. a Engages with each non-employee director individually regarding the performance and functioning of the Board and other matters as appropriate. a Oversees our Board’s governance processes, including Board evaluations, succession planning and other governance-related matters. a Leads the annual CEO evaluation. a Meets directly with management and nonmanagement employees of our firm. a Consults and directly communicates with shareholders and other key constituents, as appropriate.


Table of Contents

 

Year-Round Review of Board Composition

 

Our Governance Committee seeks to build and maintain an effective, well-rounded, financially literate and diverse Board that operates in an atmosphere of candor and collaboration.

Board Process for Identification and Review of Director Candidates to Join our Board

 

LOGO

Identifying and recommending individuals for nomination, election or re-election to our Board is a principal responsibility of our Governance Committee. The Committee carries out this function through an ongoing, year-round process, which includes the Committee’s annual evaluation of our Board and individual director evaluations. Each director and director candidate is evaluated by the Governance Committee based on his or her individual merits, taking into account our firm’s needs and the composition of our Board.

To assist in this evaluation, the Committee utilizes as a discussion tool a matrix of certain skills and experiences that would be beneficial to have represented on our Board and on our Committees at any particular point in time.

In particular, the Committee has enhanced its focus on what skills are beneficial for service in key Board positions, such as Lead Director and Committee Chairs, and has undertaken a succession planning process for those positions.

 

In identifying and recommending director candidates, the Governance Committee places primary emphasis on the criteria set forth in our Corporate Governance Guidelines, including:

 

  ¡  

Judgment, character, expertise, skills and knowledge useful to the oversight of our business;

 

  ¡  

Diversity of viewpoints, backgrounds, experiences and other demographics;

 

  ¡  

Business or other relevant experience; and

 

  ¡  

The extent to which the interplay of the candidate’s expertise, skills, knowledge and experience with that of other members of our Board will build a strong and effective board that is collegial and responsive to the needs of our firm.

Our Governance Committee welcomes candidates recommended by shareholders and will consider these candidates in the same manner as other candidates. Shareholders wishing to submit potential director candidates for consideration by our Governance Committee should follow the instructions in Frequently Asked Questions.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      29   


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Director Orientation

Director education about our firm and our industry is an on-going, year-round process, which begins when a director joins our Board.

Upon joining our Board, new directors are provided with a comprehensive orientation about our firm, including our business, strategy and governance. For example, new directors typically meet with senior leaders covering each of our divisions and regions, and undergo in-depth training on the work of each of the Board committees (such as an Audit and Risk Committee orientation session with our CFO, Controller, Treasurer and Chief Risk Officer (CRO), as well as a session with the director of internal audit). Additional training is also provided when a director assumes a leadership role, such as becoming a committee chair.

 

 

Board and Committee Evaluations

We recognize the critical role that Board and committee evaluations play in ensuring the effective functioning of our Board. It is important to take stock of Board, committee and director performance and to solicit and act upon feedback received from each member of our Board. To this end, our Governance Committee is responsible for evaluating the performance of our Board annually, and each of our Board’s committees also annually conducts a self-evaluation.

2014 Evaluations – A Multi-Step Process

 

LOGO

The Governance Committee periodically reviews the format of the Board and Committee evaluation process to ensure that actionable feedback is solicited on the operation of the Board and director performance.

 

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Table of Contents

Topics considered during the Board and Committee evaluations include:

 

Director Performance        Board and Committee
Operations
       Board Performance        Committee Performance

 

¡  Individual director performance

 

¡  Lead Director (in that role)

 

¡  Each Committee Chair (in that role)

    

¡  Board and committee membership, including director skills, background, expertise and diversity

 

¡  Materials and information, including quality and quantity of information received from management

 

¡  Access to firm personnel

 

¡  Conduct of meetings, including time allocated for, and encouragement of, candid dialogue

    

¡  Key areas of focus for the Board

 

¡  Consideration of reputation

 

¡  Strategy oversight

 

¡  Shareholder value

 

¡  Shareholder feedback

    

¡  Performance of committee duties under committee charters

 

¡  Consideration of reputation

 

¡  Effectiveness of outside advisers

 

¡  Identification of topics that should receive more attention and discussion

Board Oversight of our Firm

 

Key Areas of Board Oversight

Our Board is responsible for, and committed to, the oversight of the business and affairs of our firm. In carrying out this responsibility, our Board advises our senior management to help drive success for our clients and long-term value creation for our shareholders. Our Board discusses and receives regular updates on a wide variety of matters affecting our firm.

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      31   


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Strategy

  

¡   Our Board takes an active role in overseeing management’s formulation and implementation of the firm’s strategic plans.

–  Receives presentations covering firmwide, divisional and regional strategy and discusses these matters throughout the year both during and outside of Board meetings.

¡   Our Board’s focus on overseeing risk management enhances our directors’ ability to provide insight and feedback to senior management, and, if necessary, to challenge management, on our firm’s strategic direction.

¡    Our Lead Director helps facilitate our Board’s oversight of strategy by ensuring that the directors receive adequate information about strategy and by discussing strategy with independent directors at executive sessions.

Risk Management

  

¡   Our Board is responsible for overseeing the risk management of our firm, which is carried out at the full Board as well as at each of its Committees, and in particular the Risk Committee.

¡   Board risk management oversight includes:

–  Strategic and financial considerations

–  Legal, regulatory and compliance risks

–  Other risks considered by committees

¡    Risk Committee risk management oversight includes:

–  Overall risk taking tolerance and risk governance, as well as Risk Appetite Statement

–  Liquidity, market, credit and operational risks

–  Our Capital Plan, capital ratios and capital adequacy

–  Technology and cybersecurity risks

¡    Audit Committee risk management oversight includes:

–  Financial, legal and compliance risk, in coordination with our full Board

–  Coordination with our Risk Committee, including with respect our risk assessment and risk management practices

¡    Compensation Committee risk management oversight includes:

–  Design firmwide compensation program and policies that are consistent with the safety and soundness of our firm and do not raise risks reasonably likely to have a material adverse effect on our firm

–  Jointly with our Risk Committee, annual CRO compensation-related risk assessment (CRO Risk Assessment) (see Compensation Matters—Compensation Discussion and Analysis)

¡    Governance Committee risk management oversight includes:

–  Managing risks related to board composition and board and executive succession

¡   Public Responsibilities Committee risk management oversight includes:

–  Brand and reputational risk, including client and business standards considerations

–  Environment, social and governance risk

CEO Performance

  

¡   Under the direction of our Lead Director, our Governance Committee annually evaluates Mr. Blankfein’s performance.

–  The evaluation process includes an executive session of independent directors, a closed session with Mr. Blankfein, and additional discussion between our Lead Director and Mr. Blankfein.

¡    The Committee reviews the results of Mr. Blankfein’s evaluation under our “360 degree” review process (360° Review Process) and also assesses Mr. Blankfein’s performance both as CEO and as Chairman of the Board against the key criteria and responsibilities for these roles that were developed by the Governance Committee.

 

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Executive Succession Planning   

¡   Our Governance Committee has adopted a framework relating to executive succession planning, under which the Committee defines specific criteria for, and responsibilities of, each of the CEO, COO and CFO roles. The Committee then focuses on the particular skill set needed to succeed in each of these roles at our firm.

 

LOGO

 

¡   Our Lead Director also meets on this topic separately with our CEO and facilitates additional discussions with our independent directors about succession planning throughout the year, including at executive sessions.

Financial Reporting   

¡   Our Board, through its Audit Committee, is responsible for overseeing management’s preparation and presentation of our annual and quarterly financial statements and the effectiveness of our internal control over financial reporting.

 

–  Each quarter, our Audit Committee meets with members of our management, the Director of Internal Audit and our independent auditors to review and discuss our annual and quarterly financial statements as well as our quarterly earnings releases.

 

¡   In addition, our Audit Committee is directly responsible for overseeing the independence, performance and compensation of our independent auditors.

 

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Commitment of our Board – 2014 Meetings

 

      2014 Meetings  

Board

                            14   

Audit

     13   

Compensation

     9   

Governance

     8   

Risk

     6   

Public Responsibilities

     4   

Executive Sessions of Independent Directors

     15

 

*

Includes 5 executive sessions of our independent directors chaired by our Lead Director and 10 additional sessions led by the chairs of our Audit, Risk and/or Compensation Committees during which our independent directors met without management present.

Each of our current directors attended over 75% (the threshold for disclosure under SEC rules) of the meetings of our Board and the committees on which he or she served during 2014 for the period he or she served as director. Overall attendance at Board and committee meetings during 2014 was over 97% for our current directors as a group.

We encourage our directors to attend our annual meetings. All of our current directors who were members of our Board at the time attended the 2014 Annual Meeting.

Actively Engaged Directors Outside of Board Meetings

 

Engagement outside of Board meetings provides our directors with additional insight into our business and our industry, as well as valuable perspective on the performance of our firm, the Board, our CEO and other members of senior management.

 

  ¡  

Our individual directors have discussions with each other and with our CEO, members of our senior management team and other key employees, as well as with our regulators.

 

  ¡  

Our directors also receive weekly informational packages that include updates on recent developments, press coverage and current events that relate to our business.

 

  ¡  

Our Committee Chairs and Lead Director meet and speak regularly with each other and with members of our management in connection with planning for meetings.

 

  Among other things, each Chair, working with management, sets the agendas and reviews, provides feedback on and approves the draft materials for their respective committee meetings. The Lead Director also sets the Board agenda and reviews, provides feedback on and approves materials for meetings of the full Board, as well as the schedule of the Board and committee meetings.

2014 Meetings Attended by our Lead Director and Committee Chairs in that Capacity

 

LOGO

 

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Shareholder Engagement

 

Our Commitment to Active Engagement with Our Shareholders

Across our shareholder base, there are a wide variety of viewpoints about the corporate governance issues affecting our firm. We, including our Lead Director, meet and speak with our shareholders throughout the year.

 

2014 Lead Director Engagement

 

 

 

LOGO

How to Contact Us

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      35   


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Compensation Matters

 

Compensation Discussion and Analysis

 

Key Topics Covered in our CD&A

 

   

LOGO

           
             
    What We Paid   Page 37
    How Our Compensation Committee Made Its Decisions   Page 38
    2014 Firmwide Performance   Page 38
    2014 Individual Performance   Page 40

 

   

LOGO

             
             
    Why We Avoid a Formulaic, Strictly Metrics-Based Compensation Program   Page 43
         

 

 

LOGO

             
             
    Key Pay Practices (What We Do and What We Don’t Do)   Page 44
         

 

   

LOGO

             
             
    Annual Variable Compensation   Page 48
    Long-Term Performance Incentive Plan   Page 51

 

   

LOGO

             
             
    Stock Ownership Guidelines and Retention Requirements   Page 54
    Clawback Policy   Page 54

 

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2014 Year-End Compensation Determinations

What We Paid

The following table shows our Compensation Committee’s determinations of the form and amount of 2014 annual compensation awarded to our NEOs (dollar amounts shown in millions) as well as applicable 2013 information for individuals who were NEOs in that year, and is different from the SEC required tables in 2014 Summary Compensation Table below. The LTIP awards granted to our NEOs (discussed on pages  7 and 51) are not part of annual compensation and are not included in this table because no amounts are earned until the end of the relevant performance period.

 

                    Salary/Equity-
Based Fixed
Allowance
                                  Equity-Based
Awards
as %  of Annual
Variable Comp.
     
                         Annual Variable Compensation                Equity-Based
Awards as
% of Total
Name and Principal Position    Year                    Cash      RSUs      PSUs
(New for
2014)
     Total        

Lloyd C. Blankfein

Chairman and CEO

     2014              $  2.0             $  7.33         $  7.33         $  7.33         $  24.0       67    61
     2013              2.0             6.30         14.70                 23.0       70    64

Gary D. Cohn

President and COO

     2014              1.85             6.72         6.72         6.72         22.0       67    61
     2013              1.85             5.75         13.41                 21.0       70    64

Harvey M. Schwartz

Executive Vice President and CFO

     2014              1.85             6.72         6.72         6.72         22.0       67    61
     2013              1.85             5.75         13.41                 21.0       70    64

Mark Schwartz

Vice Chairman

     2014              1.85             5.72         11.43                 19.0       67    60

Michael S. Sherwood

Vice Chairman

     2014              1.85/9.15          1.83         9.17                 22.0       83    83**

 

* Mr. Sherwood, who is based in the U.K., received a cash salary of $1.85 million and a fixed allowance of $9.15 million, payable entirely in equity-based awards. This fixed allowance was provided as a result of applicable U.K. regulatory guidance. See page 48 for more details.

 

** This percentage reflects the RSUs paid to Mr. Sherwood as annual variable compensation, as well as the fixed allowance described above.

 

New for 2014 – Introduction of PSUs. Based on shareholder feedback, our Compensation Committee awarded PSUs to our CEO, COO and CFO, who have ultimate responsibility for firmwide performance and are uniquely positioned to drive our strategic plan. These metrics-based PSUs tie their compensation more closely to firm performance.

 

  LOGO         
                  
                
   

¡    PSUs represent one-half of the 2014 equity-based variable compensation granted to our CEO, COO and CFO.

 

¡    PSUs will pay out in cash between 0-150% of target based on our average “ROE” as calculated under the PSUs over 2015-2017.

 

¡   In order for the NEO to receive a 100% payout, our average “ROE” for 2015-2017 must be 11%:

          

¡   The Committee determined that a 50-50 split balances more traditional equity compensation tied to firm performance through stock price with metrics-based awards that use specific performance criteria.

 

¡    Payout thresholds were set by the Committee so that the PSUs will pay out at target if the firm performs at a level that is roughly equivalent to 2014. If these goals are not met, the PSUs will be reduced or even completely forfeited.

 

¡   The Committee chose ROE because it is an important indicator of the firm’s operating performance.

 

¡   Average “ROE” is calculated using the same methodology that applies to our LTIP awards, meaning that it is based on our publicly reported ROE, subject to certain adjustments (see page 49).

   

 

     LOGO

 

            
   

*Payout is scaled if results are between 4% and 14%

 

          
                      

 

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How Our Compensation Committee Made Its Decisions

 

  ¡  

Our Compensation Committee made its NEO annual compensation determinations in the context of our Compensation Principles, which encompass a pay for performance philosophy (see more detail on page 45), and carefully considered:

 

– Firmwide financial performance, including relative to peers (described below on this page and page 39); and

– Individual performance, including each NEO’s position and responsibilities (described on pages 40-42).

 

  ¡  

Based on factors including an analysis of peer company compensation, the Committee determined that 2013 compensation amounts were appropriate to use as a baseline for 2014 decisions.

 

 

  ¡  

Based on its assessments, the Committee determined that total 2014 compensation for each of our NEOs should be slightly increased (approximately 3-5%).

 

 

LOGO

2014 Firmwide Performance

Our Compensation Committee focused on each NEO’s leadership role in guiding the firm’s:

 

  ¡  

Continued improvement across key financial metrics such as net revenue, EPS, BVPS and ROE;

 

 

  ¡  

Disciplined management of its balance sheet, capital, liquidity and overall risk;

 

 

  ¡  

Continued ROE outperformance of its U.S. peer group;1

 

 

  ¡  

Significant efforts to broaden and enhance our client franchise, including a continued commitment to delivering high quality service to our clients;

 

 

  ¡  

Leading global brand, including as a result of significant investment in content creation to engage our external constituents across multiple platforms; and

 

 

  ¡  

Continued commitment to our franchise businesses, with particularly strong performance in investment banking, where the firm led both the equity and M&A league tables in 20142 and in investment management.

 

 

1 

U.S. Peers are BAC, C, JPM and MS.

2 

Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year per Thomson Reuters.

 

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The Committee reviewed our financial performance, focusing on EPS, BVPS and ROE, as well as our stock price performance, pre-tax earnings, net revenues, net earnings, compensation and benefits expense, non-compensation expense and ratio of compensation and benefits expense to net revenues. The Committee focused on EPS, BVPS and ROE as measures of our operating performance and ability to generate shareholder value in 2014. All metrics were considered on a year-over-year basis, as well as relative to our peers and in the context of the broader environment in which the firm operates.

Our Compensation Committee places substantial importance on firmwide performance metrics when assessing NEO compensation amounts. Firmwide performance is considered by the Committee in a holistic manner without ascribing specific weights to any single financial metric.

 

LOGO

 

*Figures reflect change vs. 2013.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      39   


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2014 Individual Performance

Our Compensation Committee also considered key performance highlights and individual achievements of our NEOs in connection with determining their 2014 annual compensation. Our NEOs are evaluated under our 360° Review Process, which includes both qualitative narrative and quantitative feedback in key areas such as those summarized below:

 

   

360° Review Process

 

   

 

LOGO

 

  ¡  

CEO: Under the direction of our Lead Director, our Governance Committee evaluated the performance of our CEO, including a summary of his evaluation under the 360° Review Process. Our Compensation Committee considered this evaluation and also discussed our CEO’s performance as part of its executive session to determine his compensation.

 

 

  ¡  

Other NEOs: Our CEO discussed the performance of our COO, including a summary of his evaluation under the 360° Review Process, with our Compensation Committee. Our CEO and COO reviewed the performance of our other NEOs, including summaries of their evaluations, with our Compensation Committee. In addition, our CEO submitted variable compensation recommendations to the Committee for our other NEOs, but did not make recommendations about his own compensation.

 

 

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LOGO

 

Lloyd C. Blankfein

Chairman and CEO

  

Key Responsibilities: Our Chairman and CEO is responsible for managing our business operations and overseeing our senior leaders. He leads the implementation of corporate policy and strategy and is the primary liaison between our Board and the management of our firm. In addition to his role as the leader of our organization and people, he also serves as the primary public face of our firm.

 

Key Performance Achievements:

 

¡   Led the firm to its strong financial performance, particularly in light of replacement of lost revenue streams resulting from recent divestitures in response to regulatory considerations and a focus on expense discipline and capital management.

 

¡   Navigated a challenging operating environment, both in terms of its effect on the business of the firm’s clients and impact of new regulatory requirements on the firm itself.

 

¡    Focused on managing risk and encouraging continuity in strategy, key examples of his ability to serve the firm by establishing a “tone-at-the-top.”

 

¡   Demonstrated ongoing leadership within both the financial services industry and the broader corporate community.

  
  

 

LOGO

 

Gary D. Cohn

President and COO

  

Key Responsibilities: Our President and COO is responsible for managing our day-to-day business operations and executing on firmwide priorities. He serves as a senior public face of our firm.

 

Key Performance Achievements:

 

¡   Focused on maintaining strong client relationships, particularly in the hedge fund, asset management and technology sectors as well as growth markets.

 

¡    Demonstrated leadership and strong judgment in overseeing the firm’s Business Selection and Conflicts Resolution group, which reviews and vets transactions and other opportunities involving multiple business lines and divisions.

 

¡   Guided the firm’s Client and Business Standards Committee in its critical oversight of business standards and practices, reputational risk management and client service.

 

¡    Successfully led the firm’s 2014 partner selection process in a manner that built firmwide consensus and emphasized diversity, among other important issues.

  
  

 

LOGO

 

Harvey M. Schwartz

CFO

  

Key Responsibilities: Our CFO is responsible for managing the firm’s overall financial condition, including appropriate consideration of risk management. He is also responsible for financial analysis and reporting, as well as our operations and technology functions. He is a primary liaison to our investors.

 

Key Performance Achievements:

 

¡   Showed continued skill as a spokesperson for the firm with clients, investors, analysts, rating agencies, regulators and government officials.

 

¡   Played a leading role in the firm’s continued efforts to improve its financial profile (e.g., reducing its balance sheet, increasing common equity and decreasing gross leverage).

 

¡    Demonstrated leadership with respect to the firm’s regulatory interactions and processes.

  

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      41   


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LOGO

 

Mark Schwartz

Vice Chairman and Chairman of Goldman Sachs Asia Pacific

 

  

Key Responsibilities: Our Chairman of Goldman Sachs Asia Pacific is responsible for the firm’s business and activities in the Asia Pacific (APAC) region. He serves as an important public face for the firm, particularly in China.

 

Key Performance Achievements:

 

¡   Focused on strengthening significant long-term client relationships and developing new business in the APAC region while remaining committed to risk management.

 

¡    Provided decisive, effective leadership for the firm in a key region of focus.

 

¡    Demonstrated a strong commercial impact in China.

  

 

LOGO

 

Michael S. Sherwood

Vice Chairman and
Co-CEO of Goldman Sachs International

 

  

Key Responsibilities: Our Co-CEO of Goldman Sachs International is responsible for the firm’s business and activities in the Europe, Middle East and Africa (EMEA) region and growth markets. He is a key leadership presence and liaison with regulators, particularly in the U.K.

 

Key Performance Achievements:

 

¡    Demonstrated strong leadership in connection with the firm’s efforts in growth markets businesses, utilizing a highly practical approach to business opportunities.

 

¡   Served as Chairman of the firm’s Partnership Committee from 2011-2014, helping to guide the recruitment, development, citizenship and performance of our partner and managing director communities.

 

¡    Committed to championing commercial ideas while maintaining a strong focus on reputational and financial risk management.

  

 

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Importance of Discretion

Our Compensation Committee continues to believe that discretion is a critical feature of the firm’s executive compensation program. Our business is dynamic and requires us to respond rapidly to changes in our operating environment. The Committee does not believe there is a single metric, combination of metrics or formula that fully encapsulates our Compensation Principles.

 

LOGO

Our Compensation Committee has made thoughtful enhancements to our compensation program over time, which has allowed us to ensure that our executive compensation program continues to be appropriately aligned with our overarching goal of enhancing shareholder value while promoting the safety and soundness of our firm.

 

LOGO

 

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      43   

 

Why We Avoid a Formulaic, Strictly Metrics-Based Compensation Program a A rigid, formulaic program based on metrics could have unintended consequences a We expect our executives to act prudently on behalf of both shareholders and clients, regardless of prevailing market conditions – This goal could be compromised by a strictly formulaic program, which might encourage executives to place undue focus on achieving specific metrics at the expense of others a Formulaic compensation would not permit adjustments based on less quantifiable factors such as a disparity between absolute and relative performance levels or recognition of key individual achievements a Equity-based awards, which are a significant portion of annual variable compensation for our NEOs, ensure long-term alignment without the disadvantages of purely formulaic compensation Our Compensation Committee Exercises Discretion to Actively Manage our Pay Programs


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Key Pay Practices

Our Compensation Committee considers the design of our executive compensation program to be integral to furthering our compensation principles, including paying for performance and effective risk management. The following chart summarizes certain of our key pay practices.

 

LOGO

 

  44      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  

 

What We Do Focus on aligning pay with performance, including through use of RSUs, PSUs and LTIP awards Grant equity-based awards as a significant portion (at least 2/3) of our NEOs’ annual variable compensation Award RSUs with underlying “Shares at Risk”; five-year transfer restrictions (from RSU grant date) apply to all or substantially all delivered Shares at Risk (after applicable tax withholding) Exercise judgment responsive to the cyclical nature of our business Review and carefully consider shareholder feedback in structuring executive compensation Impose clawback policy on all variable compensation awards, as applicable Utilize Stock Ownership Guidelines for SEOs and retention requirements for participating managing directors (PMDs) Provide for annual assessment by our CRO of our compensation programs to ensure programs do not encourage imprudent risk-taking Utilize an independent compensation consultant What We Don’t Do x No employment, “golden parachute” or severance agreements with our NEOs x No guaranteed bonus arrangements with our NEOs x No tax gross-ups for our NEOs x No repricing of underwater stock options x No excessive perquisites x No ongoing pension benefit accruals for NEOs x No hedging transactions or short-sales permitted for any executive officer


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Framework for Compensation Decisions

Our Compensation Principles

Our Compensation Principles guide our Compensation Committee in its review of compensation at our firm, including the Committee’s determination of NEO compensation. The full text of our Compensation Principles is available on our public website. We have highlighted some of the key elements of the Compensation Principles below:

 

LOGO

Compensation Committee Framework to Determine NEO Compensation

In addition to our Compensation Principles, our Compensation Committee is guided by our Compensation Framework, which more broadly governs the variable compensation process for employees who can expose us to material amounts of risk (such as our NEOs). Pursuant to the Compensation Framework, our Committee considered the following factors in using its discretion to determine the amount and form of compensation to be awarded to each of our NEOs (firmwide financial performance and individual performance are discussed above on pages 38-42):

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      45   

 

Paying for Performance Encouraging Firmwide Orientation and Culture Firmwide compensation should directly relate to firmwide performance over the cycle. Employees should think and act like long-term shareholders, and compensation should reflect the performance of the firm as a whole. Discouraging Excessive Risk- Taking Attracting and Retaining Talent Compensation should be carefully designed to be consistent with the safety and soundness of our firm. Risk profiles must be taken into account in annual performance reviews, and factors like liquidity risk and cost of capital should also be considered. Compensation should reward an individual’s ability to identify and create value, but the recognition of individual performance should not be out of line with the competitive market for talent.

Firmwide Individual Shareholder Financial Performance Feedback Performance Independent Compensation Risk Compensation Committee Management Consultant Input Decisions Regulatory Market for Considerations Talent


Table of Contents

Shareholder Feedback

 

  ¡  

In making NEO compensation decisions, our Compensation Committee reviews and carefully considers:

 

 

  Specific feedback received from shareholders and other constituents; and  

 

  The results of our say on pay votes.  

 

  ¡  

The Committee believes that the results of recent say on pay votes indicate that our shareholders generally support the Committee’s emphasis on prudent use of discretion in making compensation decisions.

 

 

  ¡  

As a result, the Committee has focused on being responsive in addressing key points of focus raised by our shareholders while still adhering to our overall executive compensation framework (see page 5).

 

Risk Management

 

  ¡  

Effective risk management underpins everything that we do, and compensation is carefully designed to be consistent with the safety and soundness of our firm.

 

 

  ¡  

Our CRO presents his risk assessment annually to our Compensation Committee and our Risk Committee jointly in order to assist them with this goal.

 

 

  This assessment is focused on whether our program is consistent with regulatory guidance requiring that financial services firms ensure that variable compensation does not encourage imprudent risk-taking.  

 

  Our CRO’s view was that the various components of our compensation programs and policies work together to balance risk and reward in a manner that does not encourage imprudent risk-taking.  

 

  ¡  

Our CRO also reviewed the new enhancements to our executive compensation structure described elsewhere in this CD&A, concluding that these new elements also are appropriate from a risk perspective.

 

Market for Talent

 

  ¡  

Our Compensation Committee reviews the competitive market for talent as part of its review of our compensation program’s effectiveness in attracting and retaining talent, as well as in order to help determine our NEOs’ compensation.

 

 

  Our goal is always to be in a position to appoint our most senior leaders from within our firm, and our executive compensation program is intended to incentivize our people to stay at our firm and aspire to these senior roles.  

 

  ¡  

The Committee receives information and assistance from our Global Head of Human Capital Management (HCM) and members of her team, including information related to plan design and compensation levels for named executive officers, which is used as part of its compensation determination process.

 

 

  ¡  

The Committee performs an evaluation of our existing NEO compensation program, comparing it to that of the following financial services firms (based on information obtained from an analysis of public filings by our Finance and HCM Divisions as well as compensation surveys conducted by Towers Watson & Co.):

 

 

  U.S. Peers: Bank of America Corporation, Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley  

 

  Other Key Financial Institutions: American Express Company, Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, UBS AG and Wells Fargo & Company  

Regulatory Considerations

 

  ¡  

Our Compensation Committee also considers regulatory matters and the views of our regulators when determining our NEOs’ compensation. Throughout 2014, our senior management briefed the Committee on relevant regulatory developments.

 

Independent Compensation Consultant Input

 

  ¡  

Our Compensation Committee recognizes the importance of using an independent compensation consultant that is appropriately qualified and that provides services solely to our Committee and not to our firm. Accordingly, the Committee again retained Semler Brossy as its independent compensation consultant in 2014.

 

 

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  ¡  

The Committee uses Semler Brossy because of its:

 

 

  Extensive experience working with a broad cross-section of companies;  

 

  Multi-faceted business perspective;  

 

  Expertise in the areas of executive compensation, management incentives and performance measurement; and  

 

  Quality of counsel.  

 

  ¡  

In 2014, the Committee asked Semler Brossy to assess our compensation program for our PMDs, including our NEOs. In its assessment, Semler Brossy confirmed that, consistent with last year, our program:

 

 

  Is aligned with, and is sensitive to, corporate performance;  

 

  Includes features that reinforce significant alignment with shareholders and a long-term firmwide focus; and  

 

  Utilizes policies and procedures, including subjective determinations, that facilitate the firm’s approach to risk-taking and risk management by supporting the mitigation of known and perceived risks.  

 

  ¡  

Semler Brossy did not recommend, and was not involved in determining, the amount of any NEO’s compensation.

 

 

  ¡  

In addition to providing its assessment of our compensation program for PMDs, Semler Brossy also participated in the discussion of our CRO Risk Assessment presentation and reviewed the information provided to the Committee by our Finance Division, our HCM Division and Towers Watson.

 

 

LOGO

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      47   

Semler Brossy’s Independence Semler Brossy provides services only to the Committee (and not to our firm) Semler Brossy has no significant business or personal relationship with any member of the Committee or any executive officer In May 2014, our Compensation Committee determined that Semler Brossy had no conflicts of interest in providing services to the Committee and was independent under thefactors set forth in the NYSE rules for compensation committee advisors based on these factors: The fees our firm paid to Semler Brossy are not material to Semler Brossy’s total revenues None of Semler Brossy’s principals owns any shares of our Common Stock


Table of Contents

Overview of Compensation Elements

The following chart summarizes the compensation elements that comprised our CEO’s, COO’s and CFO’s 2014 annual compensation. Additional information regarding these and other compensation elements, as well as our LTIP, is provided below.

 

LOGO

Fixed Compensation

 

  ¡  

Fixed compensation provides our NEOs with a predictable level of income that is competitive with peers.

 

  ¡  

We made no changes to NEO base salaries, and our Compensation Committee believes that these salary levels are competitive in the market for talent.

 

  ¡  

New requirements of the European Union’s Fourth Capital Requirements Directive (CRDIV) impact the amount of variable compensation that is permitted to be granted to certain U.K. employees. In order to deliver the appropriate balance of fixed and variable components of pay and comply with CRDIV, in January 2014 the Committee established a fixed allowance of $9.15 million for Mr. Sherwood, which was paid entirely in the form of equity-based awards, in addition to his base salary.

 

  Thirty percent of Mr. Sherwood’s fixed allowance was paid in RSUs that delivered into immediately transferrable shares of Common Stock in January 2015, and the remaining 70% was paid in RSUs that will deliver into Shares at Risk in three approximately equal installments in each of 2016, 2017 and 2018. Substantially all of these Shares at Risk will be restricted until January 2020.  

 

  For 2015, our Compensation Committee determined to increase Mr. Sherwood’s fixed allowance to $11.15 million, which is currently expected to be paid entirely in the form of equity-based awards.  

Annual Variable Compensation

 

  ¡  

Variable compensation provides our NEOs with the opportunity to realize cash and equity-based incentives that are aligned with firmwide and individual performance. Amounts were determined based on our Compensation Committee’s assessment of firmwide and individual performance, among other factors.

 

  ¡  

In 2014, we paid annual variable compensation to our NEOs in the form of cash, RSUs, PSUs and/or short-term RSUs. The following table summarizes the key elements of each of these components. Certain elements are common to some or all components, including:

 

  Clawback and forfeiture provisions, which are described more fully on pages 54-55; and  

 

  Treatment of RSUs and short-term RSUs upon a termination of employment or change-in-control, which is described more fully in Executive Compensation—Potential Payments Upon Termination or Change-in-Control on pages 63-65.  

 

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Variable Compensation

Element – Recipients

(Timeframe)

  Key Facts
   

Cash Variable

Compensation – all NEOs

 

¡   Provides NEO with cash-based incentives on an annual basis

   

RSUs* – all NEOs

 

(5-year Shares at Risk)

 

¡   Provides NEO with annual equity-based incentives; value tied to firm performance through stock price

 

¡   Shares underlying RSUs are Shares at Risk, meaning that transfer restrictions apply to all or substantially all Shares at Risk that are delivered (after applicable tax withholding) for five years after grant date

 

–  Approximately fifty percent of underlying shares are transferable upon delivery to permit NEOs to satisfy tax withholding obligations

 

¡   Vested at grant; Shares at Risk generally delivered in three approximately equal installments on first, second and third anniversaries of grant (subject to terms of award agreement)

 

¡    Transfer restrictions prohibit sale, transfer, hedging or pledging of underlying Shares at Risk for five years from date of grant, even if the NEO leaves our firm (limited exceptions, including for death and “conflicted employment”; see pages 63-65 for more detail)

 

–  Our Compensation Committee may permit limited exceptions for transfers (for example, gifts to estate planning entities) so long as underlying Shares at Risk continue to be subject to applicable transfer restrictions

 

¡    Each RSU includes a dividend equivalent payment right

   

PSUs* – CEO, COO and CFO

 

(3-year performance period)

 

 

¡   Newly added for 2014; value tied to firm performance both through stock price and metrics-based component

 

¡   Awards will be settled in cash based on the average closing price of our Common Stock over a period of ten trading days

 

¡    Performance is measured by our firm’s average “ROE” (calculated as described below) over the three-year performance period (2015-2017) against certain specified thresholds (see page 37 for more detail on these thresholds)

 

¡    Average “ROE” is the average of the annual “ROE” (calculated as described below) for each year during the performance period. Annual “ROE” is calculated for each year by dividing net earnings applicable to common shareholders by average monthly common shareholders’ equity, adjusted for the after-tax effects of amounts that would be excluded from “Pre-Tax Earnings” under The Goldman Sachs Amended and Restated Restricted Partner Compensation Plan (RPCP)

 

–  The types of amounts that could be excluded from “Pre-Tax Earnings” include, but are not limited to, amounts related to: exit or disposal activities, impairment of goodwill and other intangible assets, net provisions for litigation and other regulatory proceedings and items that are unusual in nature or infrequent in occurrence and that are separately disclosed, in each case if the aggregate net effect of such amounts on Pre-Tax Earnings exceeds a pre-established threshold (for relevant RPCP provisions, see page 3 of Exhibit 10.1 of our Quarterly Report on Form 10-Q for the period ended February 24, 2006, filed April 5, 2006)

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      49   


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Variable Compensation

Element – Recipients

(Timeframe)

  Key Facts
   
   

–  Additionally, if necessary or appropriate to maintain intended economics of PSUs, our Compensation Committee may make adjustments for any accounting changes, rule changes or other actions that impact capital and may also determine, in its sole discretion, whether exceptional events or transactions will be included or excluded from the calculation

 

¡   Each PSU includes a cumulative dividend equivalent payment right payable only if and when the underlying PSU award pays out

 

¡   Terms of the PSUs are not affected by a future termination of employment or change-in-control.

   

Short-Term RSUs* – Mr. Sherwood only

 

(6-month delivery schedule)

 

¡   As required by U.K. regulations, Mr. Sherwood received 50% of the 2014 annual variable compensation that he otherwise would have received in cash in the form of short-term RSUs

 

¡    Short-term RSUs represent one-fifth (approximately $1.83M million) of annual variable equity-based compensation

 

¡   Underlying shares deliver in July 2015 and will be immediately transferrable

 

¡   Terms are otherwise generally consistent with the 2014 year-end RSUs granted to Mr. Sherwood

 

* With respect to the RSUs, PSUs, and short-term RSUs awarded for 2014 year-end annual compensation, the amount of units awarded was determined in each case by dividing the dollar value of the applicable component of each NEO’s variable compensation by the closing price of our Common Stock on the grant date ($175.63 on January 20, 2015).

 

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Long-Term Performance Incentive Plan

In January 2015, our Compensation Committee also granted to each NEO a long-term incentive compensation award. The Committee considered the roles and responsibilities of each individual, including his ability to impact future firm performance, in determining the following initial notional values: Mr. Blankfein – $7.0 million; Mr. Cohn – $6.7 million; Mr. Harvey Schwartz – $6.7 million; Mr. Mark Schwartz – $4.0 million; and Mr. Sherwood – $6.7 million.

 

LOGO

 

  LTIP – Key Facts

 

Why We Use the LTIP and How It Operates

 

  ¡  

Our Compensation Committee believes that our LTIP awards help to further tie our NEOs’ pay outcomes to long-term growth in the value of our firm. Because LTIP awards have longer-term performance periods with aspirational payout thresholds directly linked to future performance in certain key metrics, the Committee considers them separately from annual compensation.

 

  ¡  

Our NEOs do not earn any amounts under LTIP awards until the end of the performance period.

 

  ¡  

Consistent with prior LTIP awards, any amounts earned under the 2015 LTIP awards will be based on certain firmwide performance metrics and will be paid in cash. Our Compensation Committee also determined that it was appropriate to eliminate its discretion to adjust the payout at the end of the performance period based on individual performance; clawback/forfeiture provisions continue to apply.

 

  ¡  

The 2015 LTIP awards are calculated in three steps, as follows:

 

LOGO

 

  Step 1: Our Compensation Committee determines the LTIP award’s initial notional value based on the grantee’s roles and responsibilities and ability to impact future performance, as well as other factors such as an analysis of peer company compensation.  

 

  Step 2: On an annual basis, the LTIP award’s notional value increases/decreases by the year’s annual “ROE,” as calculated under the LTIP (the Annual “ROE” Adjustment), subject to a 12% cap.  

 

  Step 3: At the end of the performance period, the final balance of the LTIP award is adjusted based on average “ROE” and average change in BVPS over the entire performance period (the Average “ROE”/BVPS Adjustment), subject to a cap of 150% of the amount determined following Step 2.  

 

  ¡  

Additional detail regarding the calculations applicable in Steps 2 and 3, including defined terms, can be found below under  —Additional Details Regarding LTIP Calculations.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      51   

New for 2015 – Modifications to LTIP. Based on shareholder feedback, our Compensation Committee made several important modifications to our 2015 awards: a The Committee determined that it was appropriate to eliminate its discretion to adjust the payouts at the end of the performance period based on individual performance (clawback/forfeiture provisions continue to apply); and a The Committee set an upfront expectation that new awards will have an eight-year performance period. These changes also apply to many of our prior LTIP awards, as described in more detail below.


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Key Terms and Decisions for 2015 LTIP Awards

 

  ¡  

The LTIP awards are forward-looking cash awards; payout is based on average “ROE” and average change in BVPS over the performance period.

 

 

  ROE and BVPS continue to be important indicators of our operating performance and our ability to generate shareholder value.  

 

  The thresholds for these metrics continue to be appropriate based on our Compensation Committee’s review of our historical data and the macroeconomic environment.  

 

  ¡  

The awards will have a 0% payout if performance is below minimum thresholds.

 

  ¡  

Given that the LTIP awards are intended to be longer-term, their thresholds are designed to be more aspirational than the thresholds used for the PSUs, without incentivizing undue risk-taking.

 

  ¡  

No amounts are earned based on performance in one year; negative performance would offset positive performance during the performance period.

 

  ¡  

The awards are expected to have an eight-year performance period (i.e., January 1, 2015 through December 31, 2022), except in limited circumstances.

 

  An eight-year performance period is an appropriate period of time during which to assess management’s performance over the long-term and accounts for the cyclical nature of our business and the broader macroenvironment in which we operate.  

 

  Our Compensation Committee retains the flexibility to determine prior to the end of 2016 if, due to unforeseen circumstances, a three-year performance period would be more appropriate for a particular 2015 LTIP award (for example, due to a change in applicable regulatory guidance regarding incentive compensation).  

 

  Payout would occur in the month immediately following the end of the performance period (generally January 2023).  

 

  ¡  

The LTIP awards are subject to our clawback policy (see pages 54-55).

 

  Our Compensation Committee has the ability to recapture any payment under a 2015 LTIP award that is made based on materially inaccurate financial statements or performance criteria.  

 

  The 2015 LTIP awards are also subject to the same clawback provisions as the 2014 year-end equity awards and underlying Shares at Risk for the entire performance period.  

 

  Additionally, in the event an NEO’s employment terminates within the first six months of the performance period, the Committee will have the ability to reduce the award payout to $0 based on an evaluation of certain factors it deems appropriate.  

 

  ¡  

Our Compensation Committee does not have discretion to adjust the final award value of the 2015 LTIP awards based on individual performance; clawback/forfeiture provisions continue to apply. The Committee also determined that it was appropriate to eliminate its discretion to adjust the ultimate payout of any of the LTIP awards granted in February 2012, January 2013 and February 2014 based on individual performance.

 

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Extension of Performance Period for LTIP Awards Granted in January 2013 (2013 LTIP Awards)

 

  ¡  

In December 2014, our Compensation Committee extended the performance period of the 2013 LTIP awards from December 2015 to December 2020 for each of our NEOs who received a 2013 LTIP award (Messrs. Blankfein, Cohn, Mark Schwartz and Sherwood).

 

 

  Our Compensation Committee decided to make this extension to align with its intention that all LTIP awards would have an eight-year performance period.  

 

  ¡  

In connection with this extension, our Compensation Committee also determined to apply the terms of the 2015 LTIP awards to the extension period of the 2013 LTIP awards. In addition to the elimination of discretion discussed above, the key differences now applicable to the extension period are (1) the Annual “ROE” Adjustment is now subject to an annual cap of 12% and (2) with respect to the Average “ROE”/BVPS Adjustment, the threshold required for 100% payout under the average “ROE” metric is now increased to 12% from 10%.

 

 

  The original terms of the 2013 LTIP awards will still apply to the initial three-year period, and the Average “ROE”/BVPS Adjustment (using the original thresholds applicable to the award) will occur at the end of that three-year period based solely on our firm’s performance for that period.  

 

  The resulting value will serve as a starting point for the notional value of the award during the extension period. During that extension period, the 12% cap will apply to the Annual “ROE” Adjustment, and at the end of the extension period the Average “ROE”/BVPS Adjustment (using the increased average “ROE” threshold) will be applied based solely on our firm’s performance for the extension period.  

 

  Additionally, the maximum potential payout for each of these 2013 LTIP awards is limited to 150% of the award’s initial notional value, as adjusted by the Annual “ROE” Adjustment over the eight-year period.  

Additional Details Regarding LTIP Calculations

LTIP Performance Metrics

 

  ¡  

ROE” is calculated under the LTIP in a manner identical to that described for our PSUs above; see pages 49-50 for more detail

 

  ¡  

Average “ROE” is the average of the annual “ROE” for each year during the performance period

 

  ¡  

Average change in BVPS is the average of the annual changes in our firm’s book value per common share for each year during the performance period

 

  ¡  

If necessary or appropriate to maintain intended economics of the LTIP awards, our Compensation Committee may adjust these calculations for any accounting changes, rule changes or other actions that impact capital and may also determine, in its sole discretion, whether exceptional events or transactions will be included or excluded from the calculations

Thresholds Applicable to Average “ROE”/BVPS Adjustment for 2015 LTIP Awards

 

Payout(a)   

Average “ROE” Over Performance Period

(Applies to 50% of Adjusted

Notional Value at

End of Performance Period)

    

Average Change in BVPS

Over Performance Period

(Applies to 50% of Adjusted

Notional Value at End of Performance Period)

 

Zero

     <5       <2 

50%

         

100%

     12      

150%

     ³ 15       ³ 12 
  (a) 

Payout is scaled if results are between specified percentages.

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      53   


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Other Compensation Policies and Practices

Stock Ownership Guidelines and Retention Requirements

 

New for 2015 – Adopted Stock Ownership Guidelines. Based on shareholder feedback, our Board adopted stock ownership guidelines for all of our SEOs that supplement our existing retention requirements and transfer restrictions.

 

  ¡  

On our Compensation Committee’s recommendation, our Board adopted Stock Ownership Guidelines in January 2015. These guidelines provide that:

 

 

  Our CEO must retain beneficial ownership of a number of shares of Common Stock equal to 10x his base salary for so long as he remains our CEO; and  

 

  Each of our other SEOs (including our other NEOs) must retain beneficial ownership of a number of shares of Common Stock equal to 6x his base salary for so long as he remains an SEO.  

 

  Additional transition rules would apply in the event that an individual becomes newly appointed to a Senior Executive position.  

 

  ¡  

Each SEO currently meets these new Stock Ownership Guidelines.

 

 

  ¡  

Separate from the Stock Ownership Guidelines, our Shareholders’ Agreement continues to impose retention requirements for each of our SEOs with respect to shares of Common Stock received in respect of equity awards (although short-term RSUs are not subject to the retention requirements).

 

 

  Our CEO is required, for so long as he holds that position, to retain (including, in certain cases, ownership through his spouse or estate planning entities established by him) at least 75% of the shares of Common Stock received (net of payment of any option exercise price and withholding taxes) as compensation (After-Tax Shares) since becoming an SEO.  

 

 

Similarly, each of our other SEOs is required, for so long as he holds that position, to retain at least 50% of After-Tax Shares received beginning in January 2015, and 75% of After-Tax Shares received as an SEO prior to January 2015.

 

 

  ¡  

In connection with adopting the Stock Ownership Guidelines, the Committee felt it appropriate to reassess our existing retention requirement policies for our SEOs, and ratified a reduction going forward of the retention requirement under the Shareholders’ Agreement for our SEOs (other than our CEO) to 50% of After-Tax Shares.

 

Clawback Policy

 

New for 2015 – Formalized Clawback Policy. Based on shareholder feedback, our Compensation Committee formalized and expanded our longstanding clawback practices in a comprehensive, standalone document that covers equity-based awards (PSUs and RSUs), underlying Shares at Risk, cash variable compensation and LTIP awards, as applicable.

 

  ¡  

Our Compensation Committee approved the formalized clawback policy in January 2015. The policy applies to all of our SEOs and permits recovery of awards in certain circumstances.

 

 

  ¡  

The clawback policy also expands the Sarbanes-Oxley Clawback provisions to apply to variable compensation (whether cash- or equity-based) paid to any of our SEOs (even though the Sarbanes-Oxley Act provision applies only to our CEO and CFO).

 

 

  ¡  

As in prior years, 2014 year-end RSUs and PSUs and underlying Shares at Risk are subject to forfeiture or recapture by us in certain cases, even after the transfer restrictions lapse.

 

 

  If we determine that Shares at Risk may be recaptured after delivery, we can require the return of those shares to us or the repayment to us of the fair market value of the shares (including those withheld to pay withholding taxes) and any other amounts paid or delivered in respect thereof.  

 

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  ¡  

2014 year-end RSUs and PSUs (and, in certain cases, underlying Shares at Risk) provide for forfeiture or recapture if:

 

 

  The Committee determines that during 2014, the NEO participated (including, in certain cases, participation in a supervisory role) in actions on behalf of our firm or our clients without appropriately considering risk of any kind to our firm or the broader financial system, which has or reasonably could be expected to result in a material adverse impact on our firm, the NEO’s business unit or the broader financial system;  

 

  Our firm is determined by bank regulators to be “in default” or “in danger of default” as defined under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or fails to maintain for 90 consecutive business days the required “minimum Tier 1 capital ratio” (as defined under Federal Reserve Board regulations);  

 

  The NEO engages in conduct constituting “cause” (e.g., any material violation of any firm policy or other conduct detrimental to our firm) (generally applicable to PSUs and RSUs prior to settlement and to any underlying delivered Shares at Risk thereafter until January 2020); or  

 

  The NEO becomes associated with any business enterprise that competes with any portion of our business (generally applicable to PSUs and RSUs prior to settlement).  

 

  ¡  

Mr. Sherwood’s year-end RSUs (other than short-term RSUs), including in certain cases underlying Shares at Risk, are also subject to several additional clawback provisions mandated by U.K. regulatory guidance. These provisions contemplate clawback in the event of:

 

 

  A material downturn in financial performance suffered by the firm or certain business units;  

 

  A material failure of risk management suffered by the firm or certain business units on or before December 31, 2021;  

 

  Serious misconduct that is sufficient to justify summary termination of employment under English law occurring on or before December 31, 2021 (to the extent not otherwise covered by the “cause” clawback described above); and  

 

  A failure of supervision (i.e., a forfeiture resulting from the serious misconduct of an employee over which Mr. Sherwood has supervisory responsibility, where the forfeiture relates to compliance, control or risk) that occurred during 2014.  

Hedging Policy; Pledging of Common Stock

Our NEOs are prohibited from hedging any shares of our Common Stock, even shares they can freely sell, as long as they remain executive officers. In addition, our NEOs and all other employees are prohibited from hedging their equity-based awards. Our employees, other than our executive officers, may hedge only shares of our Common Stock that they can otherwise sell. However, they may not enter into uncovered hedging transactions and may not “short” shares of our Common Stock. Employees also may not act on investment decisions with respect to our Common Stock except during applicable “window periods.” None of our executive officers has any shares of Common Stock subject to a pledge.

Qualified Retirement Benefits

During 2014, each of our NEOs (other than Mr. Sherwood) participated in The Goldman Sachs 401(k) Plan (401(k) Plan), which is our U.S. broad-based tax-qualified retirement plan. In 2014 these individuals were eligible to make pre-tax, and/or “Roth” after-tax, contributions to our 401(k) Plan and receive a dollar-for-dollar matching contribution from us on the amount they contribute, up to a maximum of $10,400. For 2014 these individuals each received a matching contribution of $10,400.

Mr. Sherwood has not participated in The Goldman Sachs UK Retirement Plan (GS U.K. Pension Plan) since April 2006, when he elected not to accrue any future pension benefits in respect of his continuing service with the firm. The firm provides each employee who has opted out of future participation in the GS U.K. Pension Plan, including Mr. Sherwood, with an annual payment in lieu of his or her participation. For employees who opted out in April 2006, including Mr. Sherwood, the amount of this payment is $27,027, which has remained fixed since 2006 and is approximately equal to the firm’s annual cost in respect of each such employee’s participation in the GS U.K. Pension Plan at that time.

 

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Perquisites and Other Benefits

Our NEOs received in 2014 certain benefits that are considered “perquisites” for purposes of the SEC rules regarding compensation disclosure. While our Compensation Committee was provided with the estimated value of these items, it determined, as in prior years, not to give these amounts significant consideration in determining our NEOs’ 2014 variable compensation.

During 2014, we made available to each of these individuals a car and driver and, in some cases, other services for security and/or business purposes. Car and driver services were contracted through a third party for our NEOs based outside the U.S. (Messrs. Mark Schwartz and Sherwood; there was no incremental cost to the firm for making this service available to Mr. Sherwood). We also offered our NEOs benefits and tax counseling services, generally provided or arranged by our subsidiary, The Ayco Company, L.P., to assist them with tax and regulatory compliance and to provide them with more time to focus on the needs of our business. Additionally, at our request, Mr. Mark Schwartz previously relocated to our Beijing office, and received international assignment-related benefits and tax equalization-related payments in connection with that arrangement.

Our PMDs, including our NEOs, participate in our executive medical and dental program and receive executive life insurance while they remain PMDs. Our PMDs, including our NEOs, also receive long-term disability insurance coverage. Our NEOs are also eligible for a retiree health care program and receive certain other perquisites, some of which have no incremental cost to us. See “All Other Compensation” and footnote (b)  inExecutive Compensation—2014 Summary Compensation Table.

Section 162(m)

Under current law, our U.S. federal corporate tax deduction for compensation paid to certain of our NEOs is limited to $1 million of non-performance-based compensation. Our NEOs’ variable compensation for 2014, including equity-based awards, is determined under the RPCP, which is our shareholder-approved plan under which we pay variable compensation to members of our Management Committee, including our NEOs. The RPCP provides for a maximum amount of variable compensation determined pursuant to a formula contained in the RPCP, with the Compensation Committee retaining the discretion to pay less than the formula amount. Amounts awarded pursuant to the RPCP are intended to constitute qualified performance-based compensation under Section 162(m) of the Internal Revenue Code (which does not count against the $1 million deduction limit). However, we may decide to pay non-deductible variable compensation. In addition, because salaries are not considered performance-based compensation under Section 162(m), salaries paid to our NEOs in excess of $1 million are not fully tax deductible by us.

 

GS Gives

We established our GS Gives program to coordinate, facilitate and encourage global philanthropy by our PMDs. Since 2009, we have reduced the amount of compensation available to pay our PMDs in connection with GS Gives. We ask our PMDs to provide us with recommendations of not-for-profit organizations that should receive donations from these contributions. These recommendations help to ensure that GS Gives invests in a diverse group of charities that improve the lives of people in communities where we work and live. GS Gives focuses on underserved communities, and we encourage our PMDs to make recommendations of grants to organizations consistent with one of four thematic pillars: building and stabilizing communities; increasing educational opportunities; creating jobs and economic growth; and honoring service and veterans.

During 2014, GS Gives accepted the recommendations of over 500 current and retired PMDs and granted over $146 million to over 1,800 not-for-profit organizations around the world. GS Gives underscores our commitment to philanthropy through diversified and impactful giving. GS Gives undertakes diligence procedures for each donation and has no obligation to follow recommendations made by our PMDs. The amounts donated in 2014 by GS Gives based on the following individuals’ recommendations were: Mr. Blankfein – $4.3 million; Mr. Cohn – $3.3 million; Mr. Harvey Schwartz – $3.9 million; Mr. Mark Schwartz – $2.3 million and Mr. Sherwood – $3.3 million. (The amount for Mr. Sherwood has been converted from British Pounds Sterling into U.S. Dollars at a rate of 1.6455 Dollars per Pound, which was the average daily rate in 2014.)

This year, we reduced the 2014 variable compensation available for our PMDs, including our NEOs, by approximately $157 million in the aggregate in connection with GS Gives.

 

  56      Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders  


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Executive Compensation

 

The following tables include compensation information for our NEOs for the last three years. For a discussion of 2014 NEO compensation, please read —Compensation Discussion and Analysis above.

The 2014 Summary Compensation Table below sets forth compensation information relating to 2014, 2013 and 2012. Pursuant to SEC rules, compensation information for Messrs. Harvey Schwartz, Mark Schwartz and Sherwood is only reported beginning with the year that each executive became a named executive officer (2013 for Mr. Harvey Schwartz and 2014 for Messrs. Mark Schwartz and Sherwood).

Pursuant to SEC rules, the 2014 Summary Compensation Table is required to include for a particular year only those equity-based awards granted during that year, rather than awards granted after year-end, even if awarded for services in that year. SEC rules require disclosure of cash variable compensation to be included in the year earned, even if payment is made after year-end.

Generally, we grant equity-based awards and pay any cash variable compensation for a particular year shortly after that year-end. As a result, annual equity-based awards and cash variable compensation are disclosed in each row of the table as follows:

 

2014

 

  ¡  

“Bonus” is cash variable compensation for 2014

 

 

  ¡  

“Stock Awards” are RSUs awarded for 2013

 

 

  ¡  

PSUs and RSUs awarded for 2014, as well as Mr. Sherwood’s equity-based fixed allowance for 2014, are not included because they were granted in January 2015. (See —Compensation Discussion and Analysis above for a discussion of these equity-based awards.)

 

2013

 

  ¡  

“Bonus” is cash variable compensation for 2013

 

 

  ¡  

“Stock Awards” are RSUs awarded for 2012

 

2012

 

  ¡  

“Bonus” is cash variable compensation for 2012

 

 

  ¡  

“Stock Awards” are RSUs awarded for 2011

 

 

2014 Summary Compensation Table

 

Name and

Principal

Position

  Year     Salary     Bonus    

Stock

Awards(a)

   

Change

in

Pension

Value

    All Other
Compensation(b)
    Total  

Lloyd C. Blankfein

Chairman and CEO

    2014      $   2,000,000      $   7,333,333      $   12,495,134      $     8,602        $     325,843      $   22,162,912   
    2013        2,000,000        6,300,000        11,305,054               323,759        19,928,813   
      2012        2,000,000        5,700,000        5,273,409        3,943        323,514        13,300,866   

Gary D. Cohn

President and COO

    2014        1,850,000        6,716,667        11,394,314        2,033        237,070        20,200,084   
    2013        1,850,000        5,745,000        10,204,277               233,688        18,032,965   
      2012        1,850,000        5,145,000        5,273,409        968        216,419        12,485,796   

Harvey M. Schwartz

Executive Vice President and CFO

    2014        1,850,000        6,716,667        11,394,314        753        216,063        20,177,797   
    2013        1,850,000        5,745,000        13,515,005               175,168        21,285,173   

Mark Schwartz

Vice Chairman and Chairman of Goldman Sachs Asia Pacific

    2014        1,850,000        5,716,667        9,199,166        17,944        7,441,685        24,225,462   

Michael S. Sherwood

Vice Chairman and Co-CEO of Goldman Sachs International

    2014        1,850,000        1,833,333        17,139,416        110,252        128,872        21,061,873   

 

Goldman Sachs         Proxy Statement for the 2015 Annual Meeting of Shareholders      57   


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(a) 

Amounts included for 2014 represent the grant date fair value of RSUs, including short-term RSUs, granted in January 2014 for services in 2013 (2013 Year-End RSUs), in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718 Compensation—Stock Compensation (ASC 718). Grant date fair value for 2013 Year-End RSUs is determined by multiplying the aggregate number of RSUs by $166.25, the closing price per share of Common Stock on the NYSE on January 28, 2014, the grant date, and, other than with respect to short-term 2013 Year-End RSUs granted to Mr. Sherwood as a result of applicable regulatory guidance in the U.K., includes a 15% liquidity discount to reflect the transfer restrictions on the Common Stock underlying the 2013 Year-End RSUs. Amounts included for 2013 represent the grant date fair value of RSUs granted in January 2013 for services in 2012 (2012 Year-End RSUs), in accordance with ASC 718. Grant date fair value for 2012 Year-End RSUs is determined by multiplying the aggregate number of RSUs by $141.01, the closing price per share of Common Stock on the NYSE on January 17, 2013, the grant date, and includes a 15% liquidity discount to reflect the transfer restrictions on the Common Stock underlying the 2012 Year-End RSUs. Amounts included for 2012 represent the grant date fair value of RSUs granted in February 2012 for services in 2011 (2011 Year-End RSUs), in accordance with ASC 718. Grant date fair value for 2011 Year-End RSUs is determined by multiplying the aggregate number of RSUs by $113.45, the closing price per share of Common Stock on the NYSE on February 1, 2012, the grant date, and includes an approximately 25% liquidity discount to reflect the transfer restrictions on the Common Stock underlying the 2011 Year-End RSUs.

 

(b) 

The charts and narrative below describe the benefits and perquisites for 2014 contained in the “All Other Compensation” column above.

 

Name    401(k)
Matching
Contribution
     Term Life
Insurance
Premium
     Executive
Medical and
Dental Plan
Premium
    Long-Term
Disability
Insurance
Premium
    Executive Life
Premium
    Benefits
and Tax
Counseling
Services*
    Car**  

Lloyd C. Blankfein

   $   10,400       $   120       $   74,200      $   763      $   21,545      $   63,970      $  58,147   

Gary D. Cohn

       10,400           120           74,200          763          13,040          77,612         52,934   

Harvey M. Schwartz

       10,400           120           74,200          763          9,599          67,234         50,528   

Mark Schwartz***

       10,400           120           24,737          763          17,597          52,644         34,671   

Michael S. Sherwood****

               204           14,232        1,228          8,761          71,733          

 

  * Amounts reflect the incremental cost to us of benefits and tax counseling services provided by Ayco or by another third-party provider. For services provided by Ayco, cost is determined based on the number of hours of service provided by, and compensation paid to, individual service providers. For services provided by others, amounts are payments made by us to those providers.

 

  ** Amounts reflect the incremental cost to us attributable to commuting and other non-business use. We made available to each of our NEOs in 2014 a car and driver for security and business purposes. Car and driver services were contracted through a third party for our NEOs based outside the U.S. (Messrs. Mark Schwartz and Sherwood; there was no incremental cost to the firm for making this service available to Mr. Sherwood). The cost of providing a car is determined on an annual basis and includes, as applicable, driver compensation, annual car lease, car rental or car service fees and insurance cost as well as miscellaneous expenses (for example, fuel and car maintenance).

 

  *** Certain of the amounts for Mr. Mark Schwartz have been converted from Chinese Yuan into U.S. Dollars at a rate of 6.1602 Yuan per Dollar, which was the average daily rate in 2014.

 

  **** Amounts for Mr. Sherwood have been converted from British Pounds Sterling into U.S. Dollars at a rate of 1.6455 Dollars per Pound, which was the average daily rate in 2014.

Also included in the “All Other Compensation” column are amounts reflecting the incremental cost to us of providing our identity theft safeguards program for U.S. PMDs, assistance with certain travel arrangements, in-office meals and security services. We provide security (the incremental cost of which was $92,073 for Mr. Blankfein) for the benefit of our firm and our shareholders. We do not consider these security measures to be personal benefits but rather business-related necessities due to the high-profile standing of our NEOs.

Mr. Mark Schwartz previously relocated to our Beijing office at our request and, for 2014, received international assignment-related benefits of $1,000,000 and tax equalization-related payments of $6,300,000. These amounts were paid after year-end on a discretionary basis under the RPCP. The international assignment-related benefits were consistent with our Global Mobility Services program applicable to expatriate employees, and the tax equalization-related payments are intended to place Mr. Schwartz in a similar net tax position as a similarly compensated employee in the United States.

For Mr. Sherwood, the amount in the “All Other Compensation” column also includes $27,027, which was the amount paid to him in lieu of his participation in the firm’s U.K. retirement plan.

We provide our NEOs, on the same terms as are provided to other PMDs and at no incremental out-of-pocket cost to our firm, waived or reduced fees and overrides in connection with investments in certain funds managed or sponsored by Goldman Sachs, unused tickets to certain events and certain negotiated discounts with third-party vendors.

We make available to our NEOs, for business use, private aircraft from third-party vendors. Our policy is not to permit personal use of such aircraft by our NEOs except in connection with business trips where the NEO pays our firm for any additional costs. In situations where an NEO brings a personal guest as a passenger on a business-related flight, the NEO pays us an amount equal to the greater of: (a) the aggregate incremental cost to us of the usage by the guest, and (b) the price of a first-class commercial airline ticket for the same trip.

 

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2014 Grants of Plan-Based Awards

 

The awards included in this table are 2013 Year-End RSUs granted in January 2014 and LTIP awards granted in February 2014.

The following table sets forth plan-based awards granted in early 2014. In accordance with SEC rules, the table does not include awards that were granted in 2015. See Compensation Discussion and Analysis above for a discussion of those awards.

 

Name    Grant
Date
                          All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(b)
     All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
   Exercise
or Base
Price of
Option
Awards
($/Sh)
   Grant Date
Fair Value
of Stock
and Option
Awards(c)
 
     

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards(a)

             
     

Threshold

($)

    

    Target    

($)

    

Maximum

($)

             

Lloyd C. Blankfein

     1/28/2014                                 88,422             $   12,495,134   
       2/27/2014           0           6,000,000           22,283,669 (d)                       

Gary D. Cohn

     1/28/2014                                 80,632             $   11,394,314   
       2/27/2014           0           6,000,000         22,283,669 (d)                       

Harvey M. Schwartz

     1/28/2014                                 80,632             $   11,394,314   
       2/27/2014           0           5,000,000         18,569,724 (d)                       

Mark Schwartz

     1/28/2014                                 65,098             $ 9,199,166   
       2/27/2014           0           4,000,000         14,855,779 (d)                       

Michael S. Sherwood

     1/28/2014                                 115,189             $ 17,139,416   
       2/27/2014           0           6,000,000         22,283,669 (d)                       
(a) 

Consists of cash awards made under our LTIP that are earned based on firmwide performance metrics. The initial performance period is three years beginning with 2014, although our Compensation Committee will make determinations at the end of 2015 regarding the extension of the period for another five years through the end of 2021. As discussed in the context of our 2015 LTIP awards, the Committee has an expectation that LTIP awards will have an eight-year performance period. The initial notional value of these awards will be adjusted upward or downward by an amount equal to our annual “ROE” (as calculated under the LTIP) for each year of the performance period, subject to an annual 12% cap. At the end of the performance period, we calculate our average “ROE” and average change in BVPS over the entire performance period. The adjusted notional value as of the end of the performance period based on annual “ROE” is then further adjusted based 50% on average “ROE” and 50% on average change in BVPS. Please see —Compensation Discussion and AnalysisLong-Term Performance Incentive Plan in our Proxy Statement for our 2014 Annual Meeting of Shareholders, dated April 4, 2014, for additional details on these LTIP awards, including further detail regarding the relevant calculations described above.

 

(b) 

Consists of 2013 Year-End RSUs. See 2014 Non-Qualified Deferred Compensation and —Potential Payments Upon Termination or Change-in-Control below for additional information on the 2013 Year-End RSUs.

 

(c) 

Amounts included represent the grant date fair value in accordance with ASC 718. Grant date fair value was determined by multiplying the aggregate number of RSUs by $166.25, the closing price per share of our Common Stock on the NYSE on the grant date, and, other than with respect to short-term 2013 Year-End RSUs granted to Mr. Sherwood as a result of applicable regulatory guidance in the U.K., includes a liquidity discount of 15% to reflect the transfer restrictions on the Common Stock underlying the 2013 Year-End RSUs.

 

(d) 

This potential maximum value is calculated based on an eight-year performance period through the end of 2021.

 

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2014 Outstanding Equity Awards at Fiscal Year-End

 

No stock options (Options) have been granted to our NEOs since December 2008.

The following table sets forth outstanding unexercised Options as of December 31, 2014, all of which were vested. Mr. Mark Schwartz does not hold any awards reportable in this table.

 

     Option Awards           Stock Awards  
Name    Option
Award
Year
    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
     Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Option
Exercise
Price ($)
     Option
Expiration
Date
          

Number of
Shares or
Units of

Stock
That Have Not
Vested (#)

     Market Value
of Shares or
Units of
Stock That
Have Not
Vested ($)
 

Lloyd C. Blankfein

     2007        322,104                204.16         11/24/2017                        
     2006        209,228                199.84         11/25/2016                          
       2005        218,872                131.64         11/27/2015                          

Gary D. Cohn

     2007        317,400                204.16         11/24/2017                        
     2006        205,228                199.84         11/25/2016                          
       2005        253,816                131.64         11/27/2015                          

Harvey M. Schwartz

     2008        211,603                78.78         12/31/2018                        

Michael S. Sherwood

     2007        271,416                204.16         11/24/2017                        
     2006        201,224                199.84         11/25/2016                          
       2005        220,392                131.64         11/27/2015                          

 

2014 Option Exercises and Stock Vested

The following table sets forth information with respect to our NEOs regarding option exercises in 2014, as well as the value of the 2013 Year-End RSUs granted in January 2014.

 

     Option Awards           Stock Awards  
Name    Number of
Shares
Acquired on
Exercise (#)
      

Value
Realized on
Exercise ($)(a)

          

Number of

Shares
Acquired on
Vesting (#)(b)

   

Value

Realized on
Vesting ($)(c)

 

Lloyd C. Blankfein

                                 88,422            14,700,158   

Gary D. Cohn

                                 80,632            13,405,070   

Harvey M. Schwartz

     91,285                8,949,581              80,632            13,405,070   

Mark Schwartz

                                 65,098            10,822,543   

Michael S. Sherwood

                                 115,189            19,150,171   

 

(a) 

Values were determined by multiplying the number of shares of our Common Stock underlying the Options by the difference between the closing price per share of our Common Stock on the NYSE on the date of exercise and the exercise price of the Options.

 

(b) 

Includes shares of Common Stock underlying 2013 Year-End RSUs, which were vested upon grant. One-third of these shares were delivered in January 2015, and one-third are deliverable on or about each of the second and third anniversaries of the grant date. For Mr. Sherwood, approximately 30% of his 2013 Year-End RSUs were short-term RSUs delivered in July 2014, with the remainder being delivered in approximately equal installments on the schedule described in the prior sentence. Substantially all of the shares of Common Stock underlying the 2013 Year-End RSUs that are delivered to our NEOs (other than with respect to the short-term RSUs granted to Mr. Sherwood) are subject to transfer restrictions until January 2019.

 

(c) 

Values were determined by multiplying the aggregate number of RSUs by $166.25, the closing price per share of our Common Stock on the NYSE on January 28, 2014, the grant date. In accordance with SEC rules the2014 Summary Compensation Table and2014 Grants of Plan-Based Awards sections above include the grant date fair value of the 2013 Year-End RSUs calculated in accordance with ASC 718.

 

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2014 Pension Benefits

The following table sets forth pension benefit information as of December 31, 2014. The Goldman Sachs Employees’ Pension Plan (GS Pension Plan) was frozen November 27, 2004, and none of our NEOs has accrued additional benefits thereunder since November 27, 1998 (at the latest). Mr. Sherwood has not accrued benefits under the GS U.K. Pension Plan since March 31, 2006.

 

Name    Plan Name      Number of Years
Credited Service (#)(a)
     Present Value of
Accumulated
Benefit ($)(b)
    Payments During
Last Fiscal Year ($)
 

Lloyd C. Blankfein

     GS Pension Plan         3         40,147          

Gary D. Cohn

     GS Pension Plan         1         8,112          

Harvey M. Schwartz

     GS Pension Plan         1         2,775          

Mark Schwartz

     GS Pension Plan         6         84,412          

Michael S. Sherwood

     GS U.K. Pension Plan         17         701,004          

 

(a) 

Our employees, including each NEO, were credited for service for each year employed by us while eligible to participate in our GS Pension Plan or GS U.K. Pension Plan (as applicable).

 

(b) 

Represents the present value of the entire accumulated benefit and not the annual payment an NEO would receive once his benefits commence. Prior to being frozen, our GS Pension Plan provided an annual benefit equal to between 1% and 2% of the first $75,000 of the participant’s compensation for each year of credited service under our GS Pension Plan. The normal form of payment is a single life annuity for single participants and an actuarially equivalent 50% joint and survivor annuity for married participants. The present values shown in this column were determined using the following assumptions: payment of a single life annuity following retirement at normal retirement age (age 65); a 4.20% discount rate; and mortality estimates based on the RP-2014 white collar fully generational mortality table, with adjustments to reflect continued improvements in mortality. Our GS Pension Plan provides for early retirement benefits in some cases, and all of our participating NEOs are eligible to elect early retirement benefits at any time prior to normal retirement age.

 

   The GS U.K. Pension Plan currently provides for an annual benefit equal to 1.25% of the first £81,000 of the participant’s compensation for each year of credited service. Mr. Sherwood ceased participation in April 2006. The normal form of payment is a single life annuity plus a contingent spouse’s annuity equal to two-thirds of the member’s pension. The present value shown in this column reflects Mr. Sherwood’s accrued benefits with an annual cost of living adjustment that is applied pursuant to the terms of the GS U.K. Pension Plan and was determined using the following assumptions: payment of a joint life annuity following retirement at normal retirement age 60; a 3.8% discount rate; and mortality estimates based on the S1 Light series fully generational mortality table, with adjustments to reflect continued improvements in mortality. The GS U.K. Pension Plan provides for early retirement benefits and Mr. Sherwood will be eligible to elect early retirement benefits upon reaching age 55.

For a description of our 401(k) Plan, our tax-qualified defined contribution plan, see page 55 above.

 

2014 Non-Qualified Deferred Compensation

The following table sets forth information for each NEO, as applicable, with respect to (i) vested RSUs granted for services in prior years and for which the underlying shares of Common Stock had not yet been delivered as of the beginning of 2014 (Vested and Undelivered RSUs) and (ii) our Non-Qualified Deferred Compensation Plan (NQDC Plan), which was closed to new participants and deferrals in December 2008.

Vested and Undelivered RSUs. The Vested and Undelivered RSUs generally were awarded for services in 2013, 2012, 2011 and 2010. RSUs generally are not transferable.

 

  ¡  

Amounts shown as “Registrant Contributions” represent the 2013 Year-End RSUs, which were vested at grant;

 

  ¡  

Amounts shown as “Aggregate Earnings” reflect the change in market value of the shares of Common Stock underlying Vested and Undelivered RSUs, as well as dividend equivalents earned and paid, during 2014; and

 

  ¡  

Amounts shown as “Aggregate Withdrawals/Distributions” reflect the value of shares of Common Stock underlying RSUs that were delivered, as well as dividend equivalents paid, during 2014.

NQDC Plan. Prior to December 2008 (when our NQDC Plan was frozen), each participant in our NQDC Plan was permitted to elect to defer up to $1 million of his or her year-end cash variable compensation for up to the later of (i) 10 years or (ii) six months after termination of employment. Messrs. Blankfein and Cohn are the only NEOs who participated in our NQDC Plan. Amounts deferred under our NQDC Plan are generally not forfeitable and were adjusted based on the performance of certain available “notional investments” selected by each participant. Distributions from our

 

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NQDC Plan to each of our participating NEOs will be made in lump-sum cash payments and will commence no earlier than 2016. These individuals are not subject to U.S. federal income tax on amounts that they deferred or on any “notional investment” earnings until those amounts are distributed to them, and we do not take a tax deduction on these amounts until they are distributed.

 

Name   Plan or Award    Executive
Contributions
in Last Fiscal
Year
    

Registrant
Contributions
in Last Fiscal

Year(a)

    

Aggregate
Earnings

in Last
Fiscal

Year(b)

    

Aggregate
Withdrawals/
Distributions

in Last Fiscal

Year

    

Aggregate
Balance at
Fiscal Year

End(c)

 

Lloyd C. Blankfein

  Vested and Undelivered RSUs              $  14,700,158       $   3,227,107         $  13,239,774       $ 33,313,562   
    NQDC Plan                      68,137                   1,506,733(d)(e)   

Gary D. Cohn

  Vested and Undelivered RSUs              13,405,070         2,918,004         12,704,191         30,616,999   
    NQDC Plan                      175,108                 3,026,776(e)(f)   

Harvey M. Schwartz

  Vested and Undelivered RSUs              13,405,070         3,021,217         14,074,326         32,737,693   

Mark Schwartz

  Vested and Undelivered RSUs              10,822,543         2,254,647         2,257,285         17,454,392   

Michael S. Sherwood

  Vested and Undelivered RSUs              19,150,171         3,217,952         17,033,658         28,475,759   

 

(a) 

Values were determined by multiplying the aggregate number of RSUs by $166.25, the closing price per share of our Common Stock on the NYSE on January 28, 2014, the grant date. In accordance with SEC rules, the —2014 Summary Compensation Table and —2014 Grants of Plan-Based Awards sections include the grant date fair value of the 2013 Year-End RSUs calculated in accordance with ASC 718.

 

(b) 

Aggregate earnings include changes in the market value of the shares of Common Stock underlying Vested and Undelivered RSUs during 2014. In addition, each RSU includes a dividend equivalent right, pursuant to which the holder is entitled to receive an amount equal to any ordinary cash dividends paid to the holder of a share of Common Stock approximately when those dividends are paid to shareholders. Amounts earned and paid on vested RSUs during 2014 pursuant to dividend equivalent rights also are included. The vested RSUs included in these amounts and their delivery dates are as follows (to the extent received by each NEO):

 

Vested RSUs         Delivery

2013 Year-End RSUs

     

One-third delivered in January 2015; one-third deliverable on or about the second and third anniversaries of grant.

For Mr. Sherwood, approximately 30% of his 2013 Year-End RSUs were delivered in July 2014, with the remainder

being delivered in approximately equal installments on the same general schedule described in the prior sentence.

2012 Year-End RSUs

      One-third delivered in each of January 2014 and January 2015; one-third deliverable on or about the third anniversary of grant. For Mr. Sherwood, approximately 33% of his 2012 Year-End RSUs were delivered in July 2013, with the remainder being delivered in approximately equal installments on the same general schedule described in the prior sentence.

2011 Year-End RSUs

      One-third delivered in each of December 2012, January 2014 and January 2015. For Mr. Sherwood, approximately 37% of his 2011 Year-End RSUs were delivered in August 2012, with the remainder being delivered in approximately equal installments on the same general schedule described in the prior sentence.

2010 Year-End RSUs (RSUs granted on

January 26, 2011 for services in 2010)

      One-third delivered in each of January 2012, December 2012 and January 2014. For Mr. Sherwood, approximately 25% of his 2010 Year-End RSUs were delivered in July 2011, with the remainder being delivered in approximately equal installments on the same general schedule described in the prior sentence.

 

     Delivery of shares of Common Stock underlying RSUs may be accelerated in certain limited circumstances (for example, in the event that the holder of the RSU dies or leaves us to accept a governmental position where retention of the RSU would create a conflict of interest). See Potential Payments Upon Termination or Change-in-Control for treatment of the RSUs upon termination of employment.

 

     With respect to our NQDC Plan, NEO account balances under our NQDC Plan were adjusted to reflect gains (or losses) based on the performance of certain “notional investments” (selected by each participant from various hedge funds and mutual funds available under the plan in 2014) to the same extent as if the participant had actually invested in those funds.

 

(c) 

The Vested and Undelivered RSUs included in these amounts are 2013 Year-End RSUs, 2012 Year-End RSUs and 2011 Year-End RSUs (to the extent received by each NEO). These stock awards were previously reported in the Summary Compensation Table (to the extent that the NEO was a

 

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  named executive officer in the applicable year of grant). Values for RSUs were determined by multiplying the number of RSUs by $193.83, the closing price per share of our Common Stock on the NYSE on December 31, 2014.

 

(d) 

This amount also reflects a deferral of compensation of $1,000,000 previously reported as bonus in the fiscal 2005 Summary Compensation Table for Mr. Blankfein.

 

(e) 

This amount also reflects a deferral of compensation of $1,000,000 previously reported as bonus in the fiscal 2006 Summary Compensation Table for Messrs. Blankfein and Cohn.

 

(f) 

This amount also reflects a deferral of compensation of $1,000,000 previously reported as bonus in the fiscal 2007 Summary Compensation Table for Mr. Cohn.

 

Potential Payments Upon Termination or Change-in-Control

 

Our NEOs do not have employment agreements that provide for severance or “golden parachute” payments.

Our RPCP, The Goldman Sachs Amended and Restated Stock Incentive Plan (2013) and its predecessor plans, and our retiree health care program may provide for potential payments to our NEOs in conjunction with a termination of employment. The amounts potentially payable to our NEOs under our pension plans, vested RSUs and our NQDC Plan are set forth under 2014 Pension Benefits and 2014 Non-Qualified Deferred Compensation sections above. The terms of the outstanding LTIP awards are not affected by a future termination of employment or change-in-control, except that following a change-in-control our Compensation Committee may not amend the terms of the awards with respect to an NEO without the NEO’s consent.

Each of our NEOs participated in our RPCP in 2014. Under our RPCP, if a participant’s employment at Goldman Sachs terminates for any reason before the end of a “contract period” (generally a one-year period as defined in the RPCP), our Compensation Committee has the discretion to determine what, if any, variable compensation will be provided to the participant for services provided in that year, subject to the formula in the RPCP. There is no severance provided under our RPCP.

Set forth below is a calculation of the potential benefits to each of our NEOs assuming a termination of employment occurred on December 31, 2014, in accordance with SEC rules. The narrative disclosure that follows the table provides important information and definitions regarding specific payment terms and conditions.

 

Termination Reason   Name    Value of
Unvested
RSUs that Vest
Upon
Termination
     Present
Value of
Premiums
for Retiree
Health Care
Program (e)
    Total  

Cause or Termination with Violation(a)

  Lloyd C. Blankfein      $          0       $ 0      $ 0   
 

Gary D. Cohn

               0         0        0   
 

Harvey M. Schwartz

               0         0        0   
 

Mark Schwartz

               0         0        0   
   

Michael S. Sherwood