Goldman Sachs takes Step One…

December 27, 2010

Anyone who’s ever been through an AA-like program (or seen any number of movies about various forms of addiction) knows that Step No. 1 is admitting that there’s a problem. (For those unfamiliar with the 12 steps, Wikipedia provides this helpful primer). We were reminded of this when we read this 8-K that Goldman Sachs filed on Thursday afternoon.

Reuters has a basic summary of the changes to Goldman’s comp plans here. In a nutshell, Goldman recently adopted a new long-term compensation plan. That they released the details after the market closed on a day before most everyone was off and the markets were closed shouldn’t be particularly surprising.

But what did catch us off-guard was this language used in the filing:

Consistent with the firm’s Compensation Principles and existing compensation programs, it is intended that any awards granted under the Plan will be designed to align compensation with long-term performance in a manner that does not encourage imprudent risk-taking.

We searched for similar language about imprudent risk-taking in Goldman’s earlier filings — one would expect that given some of the public scorn and humiliation over Lloyd Blankfein’s infamous God’s Work quote, it might have popped up in a filing or two in the past. But that’s simply not the case. Nor did we see this particular phrase in any filings made by other big Wall Street firms over the past two years.

Granted, some of this is related to new rules under Dodd-Frank (though Goldman doesn’t say that in the filing). Still, we found it interesting (and, we have to admit, somewhat amusing) that a firm whose CEO once bragged about doing God’s Work, decided to take Step No. 1 just before Christmas.

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