Employee Incentive Plans

Employee Incentive Plans

The cost of employee services received in exchange for a share-based award is generally measured based on the grant-date fair value of the award. Share-based awards that do not require future service (i.e., vested awards, including awards granted to retirement-eligible employees) are expensed immediately. Share-based awards that require future service are amortized over the relevant service period. Forfeitures are recorded when they occur.

Cash dividend equivalents paid on RSUs are generally charged to retained earnings. If RSUs that require future service are forfeited, the related dividend equivalents originally charged to retained earnings are reclassified to compensation expense in the period in which forfeiture occurs.

The firm generally issues new shares of common stock upon delivery of share-based awards. In certain cases, primarily related to conflicted employment (as outlined in the applicable award agreements), the firm may cash settle share-based compensation awards accounted for as equity instruments. For these awards, whose terms allow for cash settlement, additional

paid-in

capital is adjusted to the extent of the difference between the value of the award at the time of cash settlement and the grant-date value of the award.

Stock Incentive Plan

The firm sponsors a stock incentive plan, The Goldman Sachs Amended and Restated Stock Incentive Plan (2018) (2018 SIP), which provides for grants of RSUs, restricted stock, dividend equivalent rights, incentive stock options, nonqualified stock options, stock appreciation rights, and other share-based awards, each of which may be subject to performance conditions. On May 2, 2018, shareholders approved the 2018 SIP. The 2018 SIP replaced The Goldman Sachs Amended and Restated Stock Incentive Plan (2015) (2015 SIP) previously in effect, and applies to awards granted on or after the date of approval. The 2015 SIP had previously replaced The Goldman Sachs Amended and Restated Stock Incentive Plan (2013) (2013 SIP).

As of December 2020, 55.5 million shares were available for grant under the 2018 SIP. If any shares of common stock underlying awards granted under the 2018 SIP, 2015 SIP or 2013 SIP are not delivered due to forfeiture, termination or cancellation or are surrendered or withheld, those shares will become available to be delivered under the 2018 SIP. Shares available for grant are also subject to adjustment for certain changes in corporate structure as permitted under the 2018 SIP. The 2018 SIP is scheduled to terminate on the date of the annual meeting of shareholders that occurs in 2022.

Restricted Stock Units

The firm grants RSUs (including RSUs subject to performance conditions) to employees, which are generally valued based on the closing price of the underlying shares on the date of grant after taking into account a liquidity discount for any applicable post-vesting and delivery transfer restrictions. RSUs generally vest and underlying shares of common stock deliver (net of required withholding tax) as outlined in the applicable award agreements. Award agreements generally provide that vesting is accelerated in certain circumstances, such as on retirement, death, disability and, in certain cases, conflicted employment. Delivery of the underlying shares of common stock is conditioned on the grantees satisfying certain vesting and other requirements outlined in the award agreements. RSUs not subject to performance conditions generally deliver over a three-year period. RSUs that are subject to performance conditions generally deliver after the end of a three-year performance period. For these awards, based on performance, the final award is adjusted from zero to 150% of the original grant. Dividends that accrue during the performance period are paid at settlement.

The table below presents the 2020 activity related to stock settled RSUs.

Grant-Date Fair Value of

Restricted Stock

In the table above:

•

The weighted average grant-date fair value of RSUs granted was $220.45 during 2020, $177.42 during 2019 and $218.06 during 2018. The fair value of the RSUs granted included a liquidity discount of 10.1% during 2020, 10.5% during 2019 and 11.9% during 2018, to reflect post-vesting and delivery transfer restrictions, generally of up to 4 years.

•

The aggregate fair value of awards that vested was $2.01 billion during 2020, $2.00 billion during 2019 and $1.79 billion during 2018.

•

The ending balance included restricted stock subject to future service requirements of 72,369 shares as of December 2020 and 23,068 shares as of December 2019.

•

The ending balance included RSUs subject to performance conditions and future service requirements of 210,692 RSUs as of December 2020 and 224,898 RSUs as of December 2019, and represents the maximum amount of such RSUs that may be earned as of December 2020 and December 2019.

•

The ending balance also included RSUs subject to performance conditions but not subject to future service requirements of 489,602 RSUs as of December 2020 and 268,433 RSUs as of December 2019, and the maximum amount of such RSUs that may be earned was 734,403 RSUs as of December 2020 and 402,650 RSUs as of December 2019.

In relation to

2020 year-end,

during the first quarter of 2021, the firm granted to its employees 9.0 million RSUs, of which 3.0 million RSUs require future service as a condition of delivery for the related shares of common stock. These awards are subject to additional conditions as outlined in the award agreements. Generally, shares underlying these awards, net of required withholding tax, deliver over a three-year period, but are subject to post-vesting and delivery transfer restrictions through January 2026. These grants are not included in the table above.

As of December 2020, there was $408 million of total unrecognized compensation cost related to

non-vested

share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.69 years.

Stock Options

Stock options generally vested as outlined in the applicable stock option agreement. In general, options expired on the tenth anniversary of the grant date, although they may have been subject to earlier termination or cancellation under certain circumstances in accordance with the terms of the stock option agreement and the SIP in effect at the time of grant.

There were no options outstanding as of both December 2020 and December 2019. During 2020 and 2019, no options were exercised. The total intrinsic value of options exercised was $288 million during 2018.

The table below presents the share-based compensation and the related excess tax benefit.



	Year Ended December

$ in millions		2020	2019	2018
Share-based compensation		$1,985	$2,120	$1,850
Excess net tax benefit for options exercised		$ –	$ –	$ 64
Excess net tax benefit for share-based awards		$ 120	$ 63	$ 269

In the table above, excess net tax benefit for share-based awards includes the net tax benefit on dividend equivalents paid on RSUs and the delivery of common stock underlying share-based awards, as well as the excess net tax benefit for options exercised.