Goldman bonuses to be stock, not cash

NEW YORK – Goldman Sachs said Thursday that its top 30 executives will forgo cash bonuses for 2009, instead receiving all their year-end pay in the form of restricted stock that can’t be cashed in for five years.

The move comes as the Wall Street investment bank – which has reported massive profits this year trading in markets boosted by federal aid – faces increasing criticism from Washington over what is shaping up to be a record bonus season just a year after receiving taxpayer funds. During the first three quarters of the year, the bank set aside nearly $17 billion for compensation expenses, roughly equal to the amount it booked for the same period in 2007. That year, Goldman went on to pay a record $53 million bonus to chief executive Lloyd Blankfein.

The change in pay structure applies to the 30-person management committee, which has traditionally been compensated with a combination of cash bonuses, restricted stock and stock options.

While Washington reacted favorably to the decision, it wasn’t clear how far the action would go in tamping down the public outrage over the revival of Wall Street bonuses even as unemployment remains high.

“It’s a very small step in a very long journey,” said Nell Minow, co-founder of the Corporate Library, an independent research company specializing in executive compensation. “Does this restore their credibility? No. Do they tell us that they are starting to realize what a public relations disaster they’ve created for themselves? Yes. A lot will depend on how it’s implemented – what are the amounts going to be and on what basis are they going to be awarded?”

Goldman’s board also on Thursday granted shareholders an advisory vote at annual meetings on compensation packages for the top five executives.

The announced changes are for the 2009 pay period only.