You would think that Goldman Sachs’s decision to award stock instead of cash-money bonuses to its top 30 employees this year would be a win-win situation for employees of the firm (since stock in the most ballin’est TBTF firm on Wall Street is nothing to sneeze at) and for the public (who can feel confident that employees now have “skin in the game,” or a long-term stake in the firm’s continued health). But it’s actually lose-lose, according to the firm’s CEO.
When bonuses are announced on January 21, Lloyd Blankfein expects to hear wailing from both sides, he apparently groused recently.
Goldman Sachs Group’s chief executive, Lloyd Blankfein, has told colleagues that neither employees nor the public will be happy when the New York company announces its bonus payments, according to people who heard the remarks.
Employees, of course, will be grumble-y about the fact that getting an “IOU” coupon is not the same as getting a giant cash payout with which to buy ponies and private jets, and the public will be grumble-y because they are still torn between wanting to see Lloyd et al. put into stocks down on Bowling Green and wanting them to spend their money on ponies and private jets so that people selling them can remain employed. It’s such a conundrum. Goldman is prepared to suck it up this year, and may even make employees devote more money to charity to quell criticism. But obviously, this kind of “everyone’s unhappy” situation is unsustainable going forward. So how is Goldman preparing to resolve it in the future? The way Wall Street solves everything, of course — by doing a little repackaging:
Goldman also is considering increasing base salaries, now typically ranging from $100,000 to $250,000 or so, people familiar with the matter said. That would give employees more cash during the year, helping to offset the overall shift to more stock.
Right. Because if this crisis has taught us anything, it’s that it’s time to get rid of the cursed “bonus.” And replace it with the more traditional “huge-ass salary.”