Four Reasons Why I've Got to Admire Goldman

The much maligned financial powerhouse made the proper public relations move, when it announced Friday night that CEO Lloyd Blankfein would receive only $9 million as his 2009 bonus.

No I’m not being facetious.

The $9 million bonus award was not only perfectly acceptable to all but the most anti-business liberal, but also helped defuse the persistent political furor focused on Goldman’s ability to “print money,” while the rest of the world suffers.

What made Goldman’s Friday night notice even more effective was that it was unexpected. As sophisticated as it is business wise, when it comes to public relations, Goldman is not particularly artful.

Clumsy is more like it.

• When the big bankers visited Washington to testify at the Congressional whippin’ post in January, Blankfein came across as combative and arrogant.

• Later, when Goldman drew righteous wrath from Congressional headline seekers for betting against the same products it sold its customers, the company’s defense was muted and disdainful.

• And even when Goldman announced last month that it would give $500 million to charity, the unprecedented largesse was met with suspicion and sniping among the chattering class.

Such un-leader like public relations makes the Blankfein bonus decision even more admirable.

Here’s why:

1. Discretion is the better part of valor.

It is good to be brave, but it’s sometimes better to be careful – especially if you’re sitting in the sights of rabid Congressmen and outraged citizens.

Did Goldman have record earnings in 2009? Yes. And did CEO Blankfein therefore “deserve” more than the $67.9 million he received in 2007, when earnings were less? Probably.
But he was smart not to take more.

Had Goldman succumbed to the wishes of the capitalist absolutists – “Take it, you’ve earned it, and don’t let Obama bully you.” – he and his company would have been sitting ducks for legislative and regulatory retaliation.

2. Hang back and follow.

Goldman is, inarguably, the most powerful financial company in the universe. So, shouldn’t it be a “leader” and not a “follower?”

In this case, no.

Despite vehement denials from its public relations people, the company purposely – and smartly -- laid back and waited to see how its competitors would handle the bonus situation.

Even though “all eyes were on Blankfein and Goldman,” the company took its own sweet time over many months waiting for others to move, before it made its bonus decision.

In the end, it snuck in its muted $9 million CEO bonus – all strategically in deferred stock not cash -- behind Wells Fargo CEO John Stumpf’s piggish $18 million takeout and arch rival J.P. Morgan Chase CEO Jamie Dimon’s $17 million bonus.

3.Don’t capitulate to the mob.

There may be those among us who think that $9 million is still an awful lot of money!

These heretics might even argue that in light of the nation’s pain – much of it inflicted by bankers – and the well-healed status of Goldman’s executives, why not volunteer to take nothing this year?

Wouldn’t accepting a big fat goose egg as a bonus do more to reassure a cynical public that bankers’ hearts are in the right place? (Or that bankers even have hearts for that matter!)

I think not.

Goldman had a great year, because Goldman is a great institution – the very best (in terms of financial management) that our capitalist system has to offer. Goldman’s executives earned their pay, and they deserve at least some of it.

Stated another way, had Goldman capitulated completely and awarded no executive bonus, the terrorists – or Congress, if you prefer – would have won.

4. Keep the CEO in the Background.

Common crisis wisdom has it that the CEO is the best weapon to explain corporate policy in the face of a media onslaught.

Maybe sometimes that’s true. But always, no way.

Look at poor Akio Toyoda’s painful press conference last week in Nagoya, Japan. It was difficult to watch a company president obviously unschooled in the ways of Western media attempt to apologize for his company’s front page problems. (One self-proclaimed Yale University “crisis expert” told The New York Times that Mr. Toyoda should have personally handled all of the company’s crisis responses, thus proving one needn’t be a genius to become a Yale professor!)

Goldman, correctly, didn’t succumb for the calls for Blankfein personally to come forward and justify Goldman executive bonuses. The bonuses, ostensibly earned through hard work, spoke for themselves. The CEO had nothing -- and presumably will have nothing – further to add.

Bottom line: The great Goldman bonus controversy is now yesterday’s news and that Goldman Sachs has successfully dodged another public relations bullet.

And even though his bonus was probably less than he deserved, it’s likely that CEO Blankfein will be able to make ends meet, even on a measly $9 million.

Fraser Seitel has been a communications consultant, author and teacher for 30 years. He is the author of the Prentice- Hall textbook "The Practice of Public Relations," now in its eleventh edition, and co-author of "Idea Wise."