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Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities... Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country... Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.
A Goldman spokesman notes that director compensation is increasing because of the firm’s rising share price, but that fails to address the size of the initial equity award. As Felix has noted, the best way to pay directors is to emulate how Warren Buffett does it, giving them “a modest four-figure sum”.
Despite (or because of) their exorbitant compensation, oversight from directors at US banks was largely nonexistent in the run-up to the financial crisis. Now banks insist that because of increased legal risks and time requirements, largely resulting from the financial crisis their boards did little to mitigate, they have to pay top dollar to attract qualified directors. But the caliber of bank board members is hardly awe-inspiring. Take JP Morgan: none of the directors on the board’s risk committee has worked at a bank or as a financial risk manager.