At Goldman, bonuses are still mindboggling

New York A Goldman Sachs partner, Gus Levy, coined the maxim that long defined the bank, the savviest and most influential firm on Wall Street: "Greedy, but long-term greedy."

But these days that old dictum is being truncated to just "greedy" by some Goldman critics. While many ordinary Americans are still waiting for an economic recovery, Goldman and its employees are enjoying one of the richest periods in the bank's 140-year history.

Goldman executives are perplexed by the resentment directed at their bank and contend the criticism is unjustified. But they find themselves in the uncomfortable position of defending Goldman's blowout profits and the outsize paydays that are the hallmark of its success.

For Goldman employees, it is almost as if the financial crisis never happened. Only months after paying back billions of taxpayer dollars, Goldman Sachs is on pace to pay annual bonuses that will rival the record payouts that it made in 2007, at the height of the bubble. In the last nine months, the bank set aside about $16.7 billion (Dh61.33 billion) for compensation — on track to pay each of its 31,700 employees close to $700,000 this year. Top producers are expecting multi-million-dollar paydays.

The latest tally came on Thursday, when Goldman reported another set of robust results. But its strong financial showing — a profit of $3.19 billion in the third quarter — was overshadowed by Goldman's swelling bonus pool. Goldman set aside nearly half of its revenue to reward its employees, a common practice on Wall Street, even in this post-bailout era.

But despite Goldman's success or, perhaps, because of it, the bank has for many come to symbolise a return to wanton Wall Street excess. Even in 2008, the most tumultuous year in modern Wall Street history, Goldman employees reaped rewards that most people can only dream about. Goldman paid out $4.82 billion in bonuses last year, awarding 953 employees at least $1 million each and 78 executives $5 million or more. The rewards for 2009 will be far greater.

Goldman executives know they have a public opinion problem, and they are trying to figure out what to do about it — as long as it does not involve actually cutting pay.

Lloyd C. Blankfein, Goldman's chairman and chief executive, finds himself in the unusual position of defending a successful company in a nation that normally celebrates success.

Goldman said Thursday that it would donate $200 million to its charitable foundation (that figure represents 6 per cent of its third-quarter profit, or about six days of earnings). Rumours are swirling on Wall Street that Goldman might donate even more money to charity, perhaps as much as $1 billion, in an effort to defuse public resentment directed at the bank. Blankfein has even urged his free-spending bankers to be mindful of conspicuous consumption.

Goldman said it earned $3.19 billion in the third quarter, powered by strong trading and gains on its own corporate investments. Revenue was $12.37 billion.

The earnings of $5.25 a share exceeded analysts' estimates of $4.18 a share or $2.34 billion. Earnings in the corresponding quarter a year ago were $845 million on revenue of $6 billion.

— New York Times

News Service

perks

money makes them work

$4.82b

Goldman paid out in bonuses last year

$1m

at least 953 employees received as bonus last year