goldman bonuses in restricted equity

it's only 30 of em

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awgzN7YspXVs

But it is the top 30. It will be interesting to see whether crap flows downhill in this case.

Well let's see Lloyd Blankfein in 2008 paid cash for a $26 million penthouse in Fifteen Central Park West. So maybe he'll help the Hamptons market?

David Viniar lives in Ridgewood, NJ.

Anybody got the other 28 names? How many of them live in Connecticut and Jersey?

:)

According to my admittedly anecdotal info, it's not just GS and not just the top. I've already heard the laments about restricted stocks vested over 5 years from non-top 30 GS people.

Is this really a credible scenario? Top GS Manager to subordinate: "It is a shame that I had to take my bonus in unvested stock this year, but you deserve to be compensated in ALL CASH for your hard work." Uh huh.

Posted by 'seg' in another thread- good point:
This Goldman policy applies to only the firm's top 30 executives. Those 30 get restricted stock locked up for 5 years. Everyone else is eligible for (some) cash bonus, based on my reading. How much cash vs. stock must be a matter of debate.

Public information:
GS Revenues through Q3: $35.6 billion
GS Compensation/benefits accrual through Q3: $16.7 billion
Total employees: 31,700
Average compensation accrual per employee: $527,192 (and only going up with Q4 added)

Not every employee is based in New York, but a lot of them are. There'll be some cash paid out, don't worry.

If you some how believe these 30 people were going to solve the ills of the real estate market, it's not good. somehow i don't think that's the case. in the grand scheme of things it's good as it makes people feel better about bonus on wall street.

Joshie is that how you are spending your $527k bonus, becoming a se pro?

Flmao. You are rigt NYC re is gonna be right back, you can hire that dog walker, that masseuse, the cleaning lady, the trips to Maui, go hog wild on iTunes!!!!!!, or can you? Flmao. Josh got suck a fat one.

Does the "public information" include "there will be cash payouts, don't worry", or are you editorializing with wishful thinking? Wait, don't answer that, I just got a psychic bolt of insight.

That part was editorializing. I don't work at GS or have any particular insight into its pay policies, other than a 3-minute glance at the latest 10-Q. But IMO it is a vast oversimplification to dumb this down to a conversation of "Top GS Manager to Subordinate."

The real conversation is about the people who generated the revenues. The senior traders, I-Banking MDs, the bond salesman, prop desks, just about the entire FICC group. These are the people who generated the profits this year, and they must be largely outside the top 30.

Now in deciding pay, the executives have to balance a number of conflicting factors, one of which is the prospect of a flight of talent if they pay zero cash. It sounds like the top 30 made the tough decision to do the right thing from a PR perspective but do you think they can now jam "zero cash" on all the MDs without facing repercussions? You tell me.

Oh and one other thing to consider. At end of September GS had over $23B of unrestricted cash on the balance sheet, some of which must be to cover the $17B compensation accrual. If that doesn't get paid out in cash, then what is going to happen to that cash? Pay it to the shareholders? Pay down debt, or (double) payoff the government? Pay it to charity?

Nobody ever said zero cash. But the starting point for the discussion as it relates to this board is the presumption by some that the gigantic cash bonuses coming in Q1 were going to start the next leg up for NYC real estate, with GS leading the way, as usual. This announcement takes a pretty big bite out of that argument. So will they jam "zero cash" on MDs? Maybe not. Are most employees going to see less cash in their bonus than they thought several months ago? No doubt. We will probably learn how much as stories trickle out.

And it wasn't a PR move. Goldman's large shareholders were sounding off on this issue and recently met with the CEO to discuss it.

A flight of talent, seg? I always find that term hilarious these days! Where would they fly to? Europe? Most European leaders are putting a 50% tax on bonuses, and their unemployment rate is worth than in the US.
It's like these guys at AIG threatening they will leave in May if they don't get a bonus! Well! Let them get the hell away! For each one leaving, there will be tons of applications to fill the gap! They should be happy they still have a job! This is revolting!

Actually, this started on the other thread with Rhino86 explicitly saying zero cash. My initial post was in repsonse to that.

It was at least partially a PR move, if not entirely. The lead bloomberg story says GS is "under fire from pundits and politicians..." in the first sentence.

So, what % of the overall GS bonus pool do you think will be paid in cash? Just curious. Your guess is as good as mine, though we're clearly leaning in different directions.

So let's see after fed,state, and city taxes some 31,700 employees (2/3rds that actually may live in manhattan) will have @ 250K to splurge on ....

a)a foreclosure in Jamaica,Queens?
b) a 30% deposit on a 833K home? and not worry about selling current home because "it is no longer a buyer's market?"
c) a check to the bank when they sell their underwater home?
d)in the bank, cds, municipal munis, gold, reserve fund for health care, auto payments mortgage payments.
e)blow it all at the Unicorn Derby?

I would think that the top 30 guys/gals at GS already have all the real estate they can think of. Paying them in restricted stock won't have an impact on RE values in NYC. Feel bad for the GS people being paid in stock though (restricted or not). It's not financially astute to have most of your funds in the stock of one company. Remember what happened to the net worth of the Lehman and Bear Stearns people when their firms blew up.

"A flight of talent, seg? I always find that term hilarious these days!"

Believe it or not, there is still a market for highly-rated performers. No they wouldn't fly to Europe, they'd fly to another Wall St. firm. Or, with the explosion in fixed-income trading this year, they'd fly to one of the ~60 new market makers that didn't even exist 12-18 months ago. We're both speaking in extremes here. No, the entire crop of MDs could not suddenly leave in the night and find the same jobs elsewhere. And no, GS is not going to pay zero cash bonuses either IMO.

Finally, I never said that GS bonuses were goint to save NYC RE. That never was my point. Just trying to assess the current GS news as fairly as possible, which I do think warrants a glance at their public financials...

"The lead bloomberg story says GS is "under fire from pundits and politicians..." in the first sentence."

That is what it says. I just believe management is more responsive to the shareholders than the general public.

the bulls whols case is based on huge cash payouts by the banks...we know thats not going to happen...so come january february and all is the same, the reality will hit and prices go lower

"Well let's see Lloyd Blankfein in 2008 paid cash for a $26 million penthouse in Fifteen Central Park West. So maybe he'll help the Hamptons market?"

Of course, you could borrow against your stock in the past. But that went so awry, Goldman had to bail out its own partners. Not sure that going to be as much of an option anynmore...

Goldman Sachs Alters Its Bonus Policy to Quell Uproar

http://www.nytimes.com/2009/12/11/business/11goldman.html?hp

"Moving to quell the uproar over the return of big paydays on Wall Street, Goldman Sachs announced on Thursday that its top executives would forgo cash bonuses this year and that it would give shareholders a say in determining compensation.

With a resurgent Goldman set to award billions of dollars in bonuses %u2014 a trove that could rival the record payouts of the bubble years %u2014 the bank said that its 30 most-senior executives would be paid in the form of a special stock, rather than in cash. Goldman said that it would also let its shareholders vote on its executives%u2019 pay, although the decision would be nonbinding. "

seg: why would anyone "fly" from the most successful firm on wall street.

as for the restricted shares, I'm sure those guys will not be spending wildly. 5 yrs is a long time. the shares of a fortune 500 company that were accrued over the past 10 years in our household are all under water. and many options come due this jan. alas, we will not be spending big on re.

apt23: I agree completely -- they won't fly. Goldman has been the most successful firm on wall street because it's been ahead of the curve on so many levels. They avoided massive losses in subprime. They hire the best people more often than not. All their division are strong, if not best in class. They have an uncanny knack for avoiding big mistakes. They seem to have made a prudent move in this restricted stock scheme for the management committee. All of that said, I think it would be a major error on their part to pay no cash bonuses to the rank and file who have generated the profits that they have made this year. When most of the street is paying partly in cash, if not majority in cash. I don't believe Goldman will make that error. Analysts and associates through MD's at GS will be paid bonuses in a combination of cash and stock. Just my opinion. Feel free to disagree.

Well thx u for letting me disagree. When you have bankers who truly believe that if the us taxpayer did not step in they would have been fine, no soup for YOU!!!! When you have no changes in derivatives regulation, leverage regulations, no change in home ownership policy, 0% unlimited lending by Feds to these banks 1 yr out and in the same bad breath speak of 'poor little darlings should get more than $120k in their $500k bonus in cash' ...... Methinkz you your gray matter is compromised with the stolen greenbacks from the taxpayers.

ThE greatest innovation in banking in 50 yrs, ATMs and 7 pm closing times.

fair enough w67, but this is a different debate altogether. much of wall street (LEH, BSC) may have been insolvent without the taxpayer, but was GS? was JPM? solvency problems or a short-term liquidity fix? a whole 'nother can or worms here...

Seg? You are absolutely right. All the foreclosures, Dubai, Peter cooper, lehman brothers etc etc etc is the result of the mortgages having a 30 yr term. If they were 100 yr term io mortgages we be partying like itz 1999. How foolish of me.

But I do have a question, on the derivatives/credit default isda agreements why didn't the brains at goldman strike out the cross default provisions of all its counterparties? Thereby causing a 'short' term liquidity issue?

Thoughtful post. You must own a yacht, a Rolex and a Porsche.

z

Don't forget that the Feds imposed AIG to buy credit-default swaps at FULL VALUE from several banks including GS.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aodUvpb3L0LE
That put AIG (and tax payers) in the situation it is today: A $30 billion extended loss that the Tax payer will never recover:
http://www.google.com/hostednews/ap/article/ALeqM5jeqsina7NQY6SCzEC6hw7cMqrK5wD9CG2S280
How can the Feds fvck up so much and not do anything to get the banks to pay for all that money the gvt had to inject into the economy? It's their fault if we are in this mess today!

Just to note, not sure how these contracts will be structured, but there are ways as evidenced by executives in 2006/2007 to sell stock/options to counterparties to lock-in cash value today prior to vesting; I am sure they will fall under the radar if completed, I forget the proper SEC filing, but it is obscure, it was a way to help determine insider activity outside of Form4 filings, but Goldman could use a loophole like this for a different purpose

Sledge - a bit of an oversimplification here. AIG is in a bind not just because of GS, but because of many, many poor decisions they made along the way. And also, yes...the banks deserve a lot of the criticism they are getting, but the economy is not in shambles SOLELY because of the banks. Individuals made plenty of their own bad decisions along the way too (bought too much house/put too little down/used their house as an ATM) and many companies made bad decisions too (GM and Chrysler chose to make crappy cars for 20 years).

It is realy easy to point the finger at the banks, but the truth is that many, many more people took part in the dance that wrecked the economy than just the banks.

Is that why the 'homeowners', big 3 and banks are all getting handouts? Bc in our society we don't let the Britney fade away, we have dancing with the stars to have 'one more chance?'

and more restrictions for the banks with bailout money...

http://streeteasy.com/nyc/talk/discussion/16920-treasury-pay-czar-limits-pay-at-automakers-banks-