A Goldman bonus bonanza

Annual bonus pool at highest level ever -- $23 billion and counting

By Kim Peterson Oct 13, 2009 11:26AM

Wasn't there some controversy over Wall Street bonuses recently? You wouldn't know it by looking at Goldman Sachs (GS), whose bonuses this year look to be the highest in its history.


Analysts estimate that Goldman's annual bonus pool has hit a record $23 billion -- and that's only through the third quarter, according to The New York Times. That's twice as much as the company awarded in 2008.


And in an attempt to quash the inevitable criticism of its excess, Goldman is reportedly considering making a huge donation to charity. Perhaps in the ballpark of $1 billion.


A nice gesture, but it won't make the bonus issue go away. And will shareholders be happy with Goldman donating that kind of cash?


The Times reports that Goldman executives are paid mostly in stock, which vests over four years. The executives are paid bonuses based on performance, and Goldman has performed extraordinarily well this year.


Will Goldman need to tone down its bonus numbers, which border on obscene? More likely, the Times reports, other Wall Street firms will be pressured to ramp up bonuses to Goldman-esque levels.


More than a third of Wall Streeters expect their bonuses to go up in 2009, a survey has found.


“Banks have reverted to what they do best, take risks and make money,” a recruiting executive told Bloomberg. “There’s a feel-good factor out there at this point. It’s not what it used to be, but it’s definitely better than 2008.”  


Meanwhile, Goldman has been downgraded by banking uber-analyst Meredith Whitney. She cut the firm to neutral, saying that valuation is so high now that investors should lock in profits at current levels.


"No longer is the market underestimating Goldman’s franchise value or earnings potential,” Whitney said, according to Bloomberg. “The best money making opportunities in Goldman Sachs’s shares are being a contrarian bull rather than a consensus bull.” 

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