Goldman Sachs Is Into Sharing, To A Point : The Two-Way Just because they're masters of the universe doesn't mean the people of Goldman Sachs don't care about their fellow man. Fairly or not, the investment bank, which reported a $3.2 billion third-quarter profit, is perceived by many as a company that...
NPR logo Goldman Sachs Is Into Sharing, To A Point

Goldman Sachs Is Into Sharing, To A Point

Goldman Sachs workers will help clean up after 10,000 Thanksgiving dinners like the above samples by celebrity chef Marc Spooner, center, are served to the needy. Kathy Willens/AP Photo hide caption

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Kathy Willens/AP Photo

Goldman Sachs workers will help clean up after 10,000 Thanksgiving dinners like the above samples by celebrity chef Marc Spooner, center, are served to the needy.

Kathy Willens/AP Photo

Just because they're masters of the universe doesn't mean the people of Goldman Sachs Group Inc. don't care about their fellow man.

Fairly or not, the investment bank, which reported a $3.2 billion third-quarter profit, is perceived by many as a company that places profits and political power ahead of the general good.

But would a corporate culture that didn't care have three hundred Goldman employees volunteering to tidy up next week after a Salvation Army Thanksgiving dinner for 10,000 needy people?

Or would it create a $500 million fund, as Goldman has, to help finance thousands of small businesses, many of which are having a difficult time finding credit to keep going in the present economic climate?

All this sharing has some of Goldman's shareholders to ask the company to stop sharing so much, at least when it comes to a certain kind of sharing.

Specifically, they want the company to reduce the number of Goldman employees, including temporary workers, who are in the bonus pool which makes them eligible to receive lots of money and stock.

As The Wall Street Journal reported:

Some of the largest shareholders in Goldman Sachs Group Inc. have urged the Wall Street firm to reduce the size of its bonus pool, arguing that it should pass along more of its blockbuster earnings to investors, according to people familiar with the situation.

The investors hold tens of millions of shares in Goldman Sachs, which is on track to make the biggest employee payout in the firm's 140-year history.

Their complaints in private conversations with the company and at analyst meetings show how anger over its big-money culture is spilling into the ranks of investors who typically shy away from debates over Wall Street pay.

One frustration: Despite record net income and compensation at Goldman as markets rebound and the firm outmuscles weakened rivals for business, analysts expect its 2009 earnings per share to be 22% lower than in 2007 and roughly equal to its 2006 earnings, according to Thomson Financial.

The decline is caused by issuing more than 100 million shares in the past year to bolster Goldman's financial position and capital. The shareholders have said that reining in the bonus pool would deliver an upward jolt to per-share earnings and the share price, according to people familiar with the discussions.

Some major Goldman shareholders also are concerned about a little-noticed change in the company's financial statements that increased the firm's total head count by adding temporary employees and consultants. The change reduced per-employee compensation, making it look like Goldman employees earn less than they actually do.

The figure is a lightning rod for criticism of Goldman because its staff is on pace to earn about $717,000 apiece for 2009. Excluding temporary employees and consultants would increase compensation per employee to about $775,000.

The company's response, according to the WSJ, doesn't suggest that the company is about to share in quite the way these shareholders want.

In response to criticism that Goldman should share more of its wealth with investors, company spokesman Lucas van Praag says shareholders "have historically been more focused on the absolute return on equity and on book value per share growth" than per-share earnings.

In otherwords, with these shareholders, Goldman would prefer to change the subject.