That is why the decision of Goldman’s top seven executives to forgo `08 bonuses is getting much media coverage. “Goldman Chiefs Give Up Bonuses” is the lede story of today’s Wall Street Journal and the most e-mailed article on its website. The New York Times also gave the no-bonus story a lot of play.Goldman chief Lloyd Blankfein, who received $68.5M in cash and stock in `07, is among those executives who asked the board’s compensation committee to skip bonuses this year. Don't fret about them. The seven key guys won’t be showing up in soup kitchens any time soon. They will receive a $600K pay packet in `08. A Goldman spokesperson says the execs are passing up their bonuses because it is the “right thing to do.” You can say that again.
This blogger understands that the bulk of Wall Street comp is tied to bonuses, but when does the reality that “happy days are not here again” sink in? The Goldman execs did the comp committee and its chairman James Johnson, the former CEO of Fannie Mae, a huge favor. Goldman’s stock is down 60 percent this year. Blankfein is cutting the 32,000-member work force by 10 percent. The company reported a 71 percent drop in third-quarter net income to $810M. Revenues were down 51 percent to $6B.
Though Goldman’s performance tops competitors on Wall Street, which these days resembles something out of “Night of the Living Dead,” it is not up to the bank’s sterling track record. Also, Goldman is likely to report its first-ever loss as a publicly traded company when it reports full-year results in December. The impending PR fallout from that deficit would have been compounded had the comp committee doled out bonuses to the Big Seven. The media would have roasted Johnson and the rest of the comp committee.
Hats off to Blankfein for a savvy PR move, though one wonders how any executive deserves a one-year compensation haul of $68M.