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| Edited By: |Source: Reuters |Updated: Mar 17, 2018, 02:41 AM IST
Goldman Sachs Group Inc dramatically changed course on pay, setting aside nothing for compensation in the fourth quarter and instead making a $500 million charitable contribution.
The move helped the Wall Street bank report fourth-quarter net income of $4.95 billion, or $8.20 a share, topping analysts' average forecast by $3 per share and sending Goldman shares up 0.6 percent in premarket trading.
It also helped Goldman answer critics who have lambasted the bank for setting aside so much for bonuses so soon after US taxpayers rescued the banking industry during the financial crisis.
A protest demonstration over Wall Street excess was planned for Thursday in front of Goldman's headquarters in New York. For 2009, the bank set aside 36 percent of net revenue for compensation, a record low.
"The low compensation ratio is in response to political pressure," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. "Goldman Sachs is not a banking or financial story now, it's a political story."
The firm paid out $16.19 billion in compensation in 2009. It recorded negative compensation expense in the fourth quarter because of the contribution to Goldman Sachs Gives, the firm's charitable arm.
The compensation total was far below the record $20.2 billion the firm paid in 2007, and well below what the firm was expected to pay this year as it reported blockbuster profits.
In the 2008 fourth quarter the bank reported a loss of $2.12 billion, or $4.97 a share. Goldman shares rose $1.01 to $168.80 in premarket trade.
