Maybe Goldman Sachs (GS) does care what outsiders think about it. The company has come under plenty of fire this year for its post-financial crisis bonus payments, especially after having accepted TARP money from the government. In order to keep the world off its back, the bank is going to pay managers their annual bonuses in stock this year instead of cash.
And the stock issued will have to be held for five years. So, recipients will have a long-term stake in the company. But it seems they're being compensated for that, too as GS is spending a total of over $20 billion in compensation.
The 30 people on the company's management committee will only be given bonuses in restricted stock and a clawback provision allowing the company to reclaim compensation if employees are later determined to have been taking improper risks. Top performers in the company who are not on the management committee, though, still have the chance to earn hefty cash bonuses.
The decision to use long-term stock is rather progressive, but the sheer size of the package will make Goldman the center of the comp debate, according to Douglas Elliott of the Brookings Institiution, a former investment banker at JPMorgan (JPM).
Goldman set aside close to $17 billion for bonuses in the first three quarters of this year, despite having repaid the $10 billion in bailout funds it received from the federal government, making it an easy target for legislators who want to take action on the banking industry. In the United Kingdom, for example, bank bonuses were just spanked with a 50% tax.