The lady doth protest too much, methinks. Speaking at a banking conference in Frankfurt, Blankfein said that guaranteed multi-year contracts for bankers should be banned.
"Compensation continues to generate controversy and anger," Blankfein said, according to Bloomberg. "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."
It seems strange for the CEO of a company that just set aside a record $11.4 billion for compensation in the first half of 2009 -- a recession -- to stand up and lash out at excessive compensation. It's especially strange given that he $68.5 million in 2007 as a reward for his company's participation in what would later turn out to be a bubble.
The real story here -- there's nothing groundbreaking about the comments themselves -- is why Blankfein decided to opine on this matter now. It looks like a pretty clear and well-orchestrated effort to make the company look less aloof and more aware of the serious problems in the financial industry. Blankfein is too smart to just fly off the handle and say something that will get headlines without any particular reason -- unlike a certain CEO of AIG.
The question is whether the company will follow Blankfein's words and actually take steps toward a compensation structure that is more aligned with shareholder value and less prone to create systemic risk.