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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Bank CEO gets record holiday bonus

From Wire Reports The Spokesman-Review

Not all chief executives at the nation’s largest investment banks will receive a lump of coal instead of their typical millions of dollars in holiday bonuses this Christmas.

In a year where most investment banks lost billions of dollars on bad bets in the mortgage industry, Goldman Sachs Group Inc.’s chief executive, Lloyd Blankfein, still managed to take home $68.5 million in total compensation – a record for an investment bank chief executive.

Blankfein will receive $26.8 million in cash, and $41 million in stock and options. He also will get a base salary of $600,000.

Blankfein’s bonus is a 27.2 percent jump from the record bonus he received last year of $53.4 million in cash and stock.

Goldman Sachs was able to largely avoid the mortgage-losses that plagued its competitors, leading it to post record profits during the year. Goldman Sachs posted $3.17 billion in profit in its fourth quarter alone, far surpassing its peers.

Other investment banks have been hit hard by the declining value of debt backed by mortgages. As those mortgages – especially subprime home loans made to customers with poor credit history – have increasingly defaulted, the banks have been forced to cut the value of the bonds.

Drugstore chain Walgreen Co. used cost-cutting to help it overcome tougher economic conditions in its fiscal first quarter, reporting a modest 5.5 percent profit increase Friday that surpassed Wall Street’s expectations.

The Deerfield, Ill.-based company also stepped up its already-rapid expansion pace, opening a record 169 new stores to rocket past the 6,000 mark.

Walgreen’s earnings bump over the same quarter a year ago was notable in the face of challenges that have cut into the profits other pharmacy retailers.

Rival chain Rite Aid Corp. reported sharply wider third-quarter losses a day earlier, saying sales have been affected by a sluggish start to the cold and flu season and slower customer holiday shopping.

Walgreen shares jumped $2.22, or 6.1 percent, to close at $38.47 Friday.

Holiday shopping might not be enough to save the fourth quarter for struggling electronics retailer Circuit City Stores Inc.

Executives with the Richmond-based company warned Friday that they expect a modest loss in the period, despite America’s traditional holiday hunger for televisions and other high-tech gadgets.

Coupled with a wider-than-expected third-quarter loss, the gloomy prediction prompted Wall Street to question whether Circuit City should give up trying to fix its numerous problems and hang out the “for sale” sign.

The nation’s second-biggest consumer electronics retailer saw shares tumble Friday as investors reacted to a quarterly loss driven by lower extended warranty sales and business interruptions the company blamed on ongoing restructuring efforts.

“Clearly we are very dissatisfied,” Chief Executive Philip Schoonover told analysts during a conference call. Schoonover said the company underestimated the financial impact of cost-saving initiatives on sales.

Its stock fell $1.91, or 28.68 percent, to $4.75 in trading Friday, a 52-week low.

The results came three days after larger rival Best Buy Co. reported its third-quarter profit jumped 52 percent.