Goldman Sachs has presented its top London employees with millions of pounds of free shares after their pay was to be capped, according to Reuters on Saturday, which cited a report by Britain’s Sky Television.
Sky’s financial editor Mark Kleinman said that anonymous sources close to Goldman said that the action had been taken after discussion with the Financial Services Authority, Britain’s regulatory body.
Kleinman said in the report, “My understanding is that Goldman felt compelled to hand out the free shares in order to retain key staff, with several London-based partners of the bank having left earlier this year after seeing their compensation capped at 1 million pounds."
Salaries were capped after then-finance minister Alistair Darling decided to impose a one-time tax of 50% on discretionary awards of more than 25,000 pounds ($39,600). This meant that Goldman’s staff would earn less than their counterparts in other parts of the world, and the decision was made to award the stock to retain key personnel.
Conditions were attached to the awards; the shares could not be sold for five years, even if those who received them left Goldman.