Those include awards that Cohn wouldn't have been able to access or sell otherwise, in some cases for a number of years, had he remained at the bank or simply retired. The payment includes lifting restrictions on $23 million in shares Cohn owned, accelerating the delivery of $35 million in restricted shares he had earned, and unshackling another $65 million in cash for long-term performance bonuses that would have been tied to the bank's future performance.
With Goldman Sachs trading north of $230 a share, Cohn will get the payout near the bank's highest stock price in years. "The timing is exquisite given the current rally," says Brian Foley, an independent compensation consultant. "If the stock goes higher, he ended up leaving something on the table. Or it could go lower, in which case he substantially benefited."
Cohn owns far more Goldman shares outright -- in a filing, the company said his total owned shares, including the equity listed above, were valued at $220 million -- which he will need to sell to take the government post. If confirmed, Cohn will also gain access to special tax treatment that allows him, like other executive-branch appointees, to defer the tax burden on capital gains he earns because he has to sell the stock, as long as he puts the proceeds into Treasury bonds or diversified mutual funds.
The company also said he would be required to divest from the firm's deferred compensation plan, valued at $3 million in its last proxy, and additional investments in certain private-equity and hedge funds the firm manages. Details won't be shared about those investments until the firm's proxy statement is filed this spring.
Cohn's and Tillerson's payouts reflect already reported compensation, not a severance package given because they are leaving the firm. Andy Puzder, Trump's Labor Secretary nominee and chief executive of privately held CKE Restaurants, also will not receive a severance payment, according to a spokesman, George Thompson. He added that Puzder is also not expected to receive any kind of accelerated awards or sped-up timing on shares. "To my knowledge there is none of that," he said. Puzder's financial disclosure paperwork is not public, and a Senate Democrat expressed concern about the lag Thursday morning.
In an emailed statement, Thompson said that if confirmed, "Puzder would resign from CKE and would thus not be entitled to any severance benefits or other special termination-related or retirement-related payments or continuing benefits from CKE." While he would be allowed to continue group health benefits, like other departing employees, "that would be at Mr. Puzder's cost," and would end when he became eligible for health benefits available to government employees. Puzder would also be required to sell the equity he owns in CKE.
Cohn's and Tillerson's nine-digit payouts, meanwhile, are eye-popping in part because both Goldman and Exxon require particularly long restrictions or holding periods for some or all of their awards. At Exxon, executives had to wait five years to vest in the first half of their stock grants and 10 years or retirement -- whichever comes later -- to vest in the second half. Goldman executives, meanwhile, have to hold 50 to 75 percent of their equity for as long as they're in those positions, according to a spokeswoman, and long-term cash rewards require an eight-year performance period before making a payout.
That's longer than most companies, which typically hold onto executives' shares for three years or so, said John Roe, a managing director at proxy adviser ISS. "They’re both very long-term oriented," he said. "That's what creates this problem where there's this backlog of equity awards."
While shareholders tend to value those kind of restrictions, they can also lead to some tricky governance dilemmas. In Exxon's case, the board had to decide whether to vest Tillerson in his shares after touting for years that the awards "are not subject to acceleration, even at retirement, except in the case of death." Earlier this month, the oil giant said Tillerson would surrender his shares and receive a cash payment roughly equal to their value, minus $3 million, resulting in just more than $180 million being paid to an irrevocable "Ethics Compliance Trust."
Goldman's board did not face as much of a dilemma, thanks to a provision in its documents that expressly permits awards to be delivered or have the restrictions lifted if the executive becomes employed by the U.S. government. (In the case of its cash and stock long-term performance awards, meanwhile, Goldman decided to shorten the time period and base the payout on the firm's performance through Dec. 31, 2016.) A company that once earned the nickname "Government Sachs," Goldman has long had former executives go on to work in Washington, a tradition Trump is keeping even after railing against the firm and attacking Hillary Clinton's speeches there on the campaign trail.
"They have a beaten path," Foley said. "This is not the first time that somebody high up at Goldman has gone this route."
Indeed, when George W. Bush named former Goldman Sachs CEO Henry Paulson to be Treasury Secretary in 2006, the firm sped up the unvested shares Paulson held. At the time, Paulson also filed to sell nearly $500 million in Goldman stock due to conflict-of-interest rules.