Goldman Freeing Themselves of Compensation Limitsby Tim Manni
Goldman Sachs was able to raise enough money in the first quarter of 2009 to pay back half of their TARP debt. The investment bank raised $5 billion by selling 40.65 million shares of their stock at $123 a share. Goldman’s CEO says he’s pushing to run his company free of limits on executive compensation:
Chief Executive Officer Lloyd Blankfein, 54, wants to refund money received from the U.S. Treasury’s Troubled Asset Relief Program in October to run his bank without any limits on compensation. The company, which set a Wall Street pay record in 2007, announced the share sale as it unveiled first-quarter profit that exceeded the most optimistic Wall Street estimates.
“There are a lot of banks looking to raise money right now and Goldman has put itself at the head of the queue,” said Richard Staite, a London-based analyst at Atlantic Equities LLP who rates the stock “neutral.” Repaying TARP money “frees them up to retain talented staff with better compensation.”
At the moment, Goldman’s surprising first-quarter results are a standout amongst their struggling competitors. Analyst hope the positive earning can be sustained through out the future:
While many analysts and investors applauded Goldman Sachs’s plan to repay the TARP money, others said it may pressure other banks to follow suit or risk appearing dependent on the government.
The Treasury’s stress tests of the country’s largest banks are due to conclude at the end of April. Only firms that score well will likely be favored to repay their debt in the coming months.