Goldman Sachs (NYSE:GS) Chief Financial Officer David Viniar said at a conference that in 2010 they will resume paying their employees by performance and not cut bonuses as they did in 2009.
He was of course referring to the so-called public outrage over what executives were being paid after being bailed out using taxpayer dollars via the Troubled Asset Relief Program (TARP).
Along with the performance of each individual employee, other factors related to compensation in 2010 mentioned by Viniar included the economic environment and the profits generated by the company throughout the year.
When the level of compensation was recently unveiled, it surprised and largely shut up the mainstream media who were looking to pounce on the alleged story that Blankfein alone was going to receive $100 million for 2009 himself.
That was probably a planted story in a move to influence Goldman, but it backfired because it made the compensation offered to Goldman’s key people look small after that. Of course who knows, maybe Goldman themselves planted it for that purpose. Either way, it made the $9 million in stock for their top people look good in the eyes of the public.
And if you contrast that with the $68.5 million Blankfein received in 2009, it was in fact a huge decrease in pay. Some of the firms better producers even made more than Blankfein in 2009.
Even so, it seems what Viniar is saying is stock options alone aren’t going to be the key currency for compensation this year for their people, as most workers prefer cash above all else as a reward for their performance.
As far as rumors concerning Goldman getting out of the bank holding company business, Viniar stated at the conference the company would continue to maintain that part of the business and won’t be attempting to go back to being a pure investment bank at this time, even though it would release them to take on more risk, and also the possibility of more reward.
If they did change it would probably give them a lot more negative press as the idea of becoming a bank holding company in order to receive taxpayer funds for a short time, and then to revert back to doing their former business wouldn’t be received too well by anyone. So for now we’ll see Goldman remain a bank holding company, but if that doesn’t work for them after a period of time, I’m sure they won’t hesitate at all to divest themselves of that designation as the economic environment changes.
