THE boss of Goldman Sachs yesterday defended the bank&rsquo;s pay policies, insisting his staff were paid more because they were &ldquo;among the most productive in the world&rdquo;.<br /><br />Lloyd Blankfein, Goldman&rsquo;s chair and chief executive, also rejected calls to break up the bank and said the firm was easier to manage than its larger rivals.<br /><br />&ldquo;I often hear references to higher compensation at Goldman,&rdquo; Blankfein told a banker&rsquo;s conference in New York. <br /><br />&ldquo;What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world.&rdquo;<br /><br />The comments show that Goldman is prepared to launch a vigorous fightback against critics who believe that it pays its bankers too much. Its approach is in stark contrast to other firms that have chosen instead to go to ground. <br /><br />Goldman is expected to pay out an average of $650,000 (&pound;388,100) in compensation to each of its 30,000 employees this year. This would match its bumper bonus year of 2007.<br /><br />But Blankfein said Goldman, the most profitable securities firm in Wall Street history, had &ldquo;established a prudent culture of risk management&rdquo;.<br />Since 2000, overall compensation at Goldman represented just 46.7 per cent of revenues compared with 52.1 per cent at its rivals, Blankfein said.<br /><br />Goldman&rsquo;s pre-tax profit margins, at 29 per cent, were 10 percentage points higher than the average for other financial firms in the Fortune 500 this decade, he added.<br /><br />&ldquo;These are profits that go to shareholders after we pay our people,&rdquo; Blankfein said. &ldquo;Our shareholders are pensioners, mutual funds and institutional investors, and they are all taxpayers.&rdquo;<br /><br />The average annual earnings returned to shareholders, per employee, totalled $196,004, compared with $79,962 at the other banks, Blankfein said.<br /><br />Even though Goldman converted to a bank-holding company last year, it has stuck to its investment-banking business model focused on advising, financing and investing, Blankfein added.<br /><br />&ldquo;Most of the activities we do, and you can be confused if you read the pop press, serve a real purpose,&rdquo; Blankfein said, adding it wouldn&rsquo;t &ldquo;be better for the world or the financial system&rdquo; to change the firm&rsquo;s activities.<br /><br />&ldquo;Our business is very complex, and I won&rsquo;t deny that, but it&rsquo;s far, far simpler than most of the competitors,&rdquo; he added. &ldquo;I wonder myself how some of these things get managed.&rdquo;<br /><br />The Federal Reserve is proposing to limit incentive pay and bonuses at US-regulated banks in order to promote financial stability. The proposals offer guidance for compliance rather than specific pay caps or targets for bonuses.<br /><br />Blankfein said &ldquo;for the most part the proposals that have been offered are not really conflicting with our view&rdquo;.<br />