WASHINGTON • Goldman Sachs Group received an endorsement from Institutional Shareholder Services (ISS) for the firm's executive-pay plan after the proxy-advisory firm urged shareholders to vote against last year's proposal.

ISS, whose guidance is used by institutional investors casting votes at annual meetings, reversed its recommendation partly because of the bank's decision to eliminate a long-term cash incentive award, according to a report sent on Tuesday to clients.

Goldman Sachs' compensation plan received just two-thirds support at last year's meeting, the least since such votes began in 2009. In response, the bank met investors holding about 40 per cent of its shares. In addition to removing the long-term incentive plan, or LTIP, the board also linked all equity awards given to the chief executive and chief financial officers to the company's relative performance.

"The compensation committee demonstrated adequate responsiveness by reaching out to shareholders and making significant pay changes to address their concerns," ISS said in the report.

Without the long-term cash award, chief executive officer Lloyd Blankfein's pay for last year fell 27 per cent to US$22 million (S$30.8 million) from a year earlier, dropping his compensation to third place among chief executives of the six largest US banks.

In recent years, Mr Blankfein was awarded LTIPs that increased his target compensation by US$7 million, making him the highest-paid executive in the group.

Last year, ISS said the cash LTIP awards "could produce outsized payouts far into the future" because of their potential to grow exponentially over time. The awards are linked to results over eight years and will begin showing up in compensation figures in 2019, the firm said on Tuesday.

Parts of the plan require continued monitoring, such as "the rigour of performance targets and discretionary nature of the compensation programme", ISS said.

BLOOMBERG