Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein said Wednesday that multiyear guaranteed contracts for bankers should be banned and that the "clawback" of pay should be permitted to discourage excessive risk taking.

The portion of pay in stock should rise "significantly" as compensation increases, senior bankers should get most of their pay in deferred equity and top executives should be required to retain the bulk of the equity until they retire, Blankfein said at a banking conference in Frankfurt Wednesday.

"Compensation continues to generate controversy and anger," he said. "And, in many respects, much of it is understandable and appropriate. There is little justification for the payment of outsized discretionary compensation when a financial institution lost money for the year."

Goldman Sachs fueled criticism of pay practices on Wall Street when it set aside a record $11.4 billion for compensation and benefits in the first half of 2009.

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