Goldman Sachs will announce Q3 earnings this week, and CNBC’s Charlie Gasparino looks into the “PR dilemna” the firm faces, “in handing out huge bonuses to its bankers and traders only a year after needing federal assistance to survive.”
According to Gasparinois, “the firm is preparing to take a number of steps to lessen the public relations hit.” A few steps, such as paying more of the bonuses out in company stock and giving a large charitable donation are on the table.
Gene Marbach, Group Vice President at Makovsky + Company, told PRNewser, “Backlashes typically occur when bonuses are paid by companies that are floundering usually as a means to retain executive talent, as I believe was the case with AIG. In service businesses, the most important asset is people and, if you don’t reward them for performing, you run the risk of losing them.”
Regarding the idea of paying out a higher percentage of the bonuses in stock, Marbach said, “It would be interesting to know the details of the stock bonuses. For example, restrictions on sales, etc. Stock bonuses are good way of aligning management’s interests with those of the company’s shareholders.” On the firm making a large charitable contribution, “The idea is good; however, I think it might be greeted with a certain degree of cynicism,” he said.
The CNBC story also notes that CEO Blankfein could increase his visibility via selective media interviews. “He could use such opportunities to discuss the firm’s compensation practices and detail how it determines bonus allocations,” said Marbach.
Not everyone agrees. “The key to providing sound PR advice is to know when it’s best to leave some things unsaid; and Goldman Sachs has virtually nothing to gain by trying to put a positive spin on the bonus issue,” said Richard Dukas, President and CEO of Dukas Public Relations.
“They can try to explain it away and address it proactively, but that’s a huge uphill battle that won’t be effective. For now, they should leave it alone and simply state something to the effect of ‘we are honoring long-term contracts given to employees and executives who are integral to the success of the company’ and then they should go back to discussing their business.”
[Image: Goldman Sachs' offices on 85 Broad St. in Manhattan.]
- VP of Korean Air Lines Resigns After Tantrum Over Macadamia Nuts Delays Flight
- Rolling Stone Revises Apology as Backlash Against its Handling of Rape Story Grows
- GOOD NEWS: Cops Buy Groceries for Great-Grandmother After Purse Snatching
- Old Navy: Your Favorite Sexist, Sizeist Retail Store?