Bonuses Come Into Focus For CEO, Execs at Goldman Sachs (NYSE: GS)

The good times are back again at Goldman Sachs (NYSE: GS), as bonus payments come into focus.

How can we make sure that the interests of firm management are properly aligned with the interests of shareholder? By paying them in stock, of course.

Goldman Sachs (NYSE: GS) has drawn significant fire in recent months, as word trickled out that the firm’s average compensation would broach nearly $700,000, and bonuses would be paid out this year. Since the firm received TARP funds last year (and paid them back in early 2009) Goldman has been at the center of much debate. As main street struggles with unemployment and falling income in real terms, the good times seem to be back again at the venerable Wall Street institution.

Goldman was facing a public relations disaster, so acted accordingly: the top executives will not receive cash bonuses this year, and instead, the 30 high ranking executives will receive restricted stock, which cannot be sold for at least five years.

The other 31,000 employees at the bank will be compensated with cash and stock, and since Goldman turned such large profits this year, payouts will be substantial. Although this will draw the wrath of many, it is not all bad – the people receiving these bonuses will in turn spend this money, which will create jobs (or prevent job loss, to borrow a term from the Obama administration).

The US financial markets have recovered much faster than the broader economy, so while the national unemployment rate floats around 10%, big bonuses from banks bailed out just last year have remained a hot button political issue. Goldman’s bonus payouts will not alter the fourth quarter performance either, as the strong profits in the first three quarters enabled the firm to accrue these bonuses along the way.

Facing such political pressure, Goldman CEO Lloyd Blankfein commented “The measures that we are announcing today reflect the compensation principles that we articulated at our shareholders’ meeting in May.”

Meanwhile, the British Treasury department has adopted a policy of their own, cracking down on the banks, and levying a one-time tax of 50 percent on any bonuses paid to bankers in the country above 25,000 points (approximately $40,642). That means Goldman employees working in Britain may have to give up half of their year-end bonuses, and 7 of the top 30 Goldman execs are London based.

Goldman had set aside almost $17 billion through the first nine months of the year for compensation, or about 47 percent of net revenue. This number includes salary, bonuses, benefits and payroll taxes.

The actual bonus pool will not be disclosed until the middle of January, when fourth-quarter results are released.