Goldman Sachs execs exercise 10-year old options


It pays to be a long-time employee of Goldman Sachs.

In this era, many have lamented the lack of loyalty by employees, who seem to be all too willing to switch jobs at the mere whiff of a "better opportunity." In the banking industry, boards have long been using options to incent executives to stick it out over the long haul, setting vesting periods over several years. If you work at a place where the stock price fares well over the long-term, these options can pay off.

A group of top execs have just exercised options that were granted 10 years ago, generating a nice profit. Bloomberg notes that, "Eight executives at Goldman Sachs, including Blankfein, Cohn and Viniar, have collected more than $47.7 million by selling shares and exercising options that were granted 10 years ago at a strike price of $78.87 this month and last. Shares obtained by exercising options this week were sold at prices ranging from $116.65 to $121.29."

Not all bank executives are in such enviable positions. Some bank stocks prices are currently below what they were 10 years ago, meaning they're worthless for the executives. In some cases, boards have been known to rejigger the strike prices of such options, essentially using board fiat to make them suddenly "in the money." I can't imagine that happening now. The uproar would not be worth it. Even beholden boards have their limits.

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- here's the article