Pressure on Goldman to deal with image problem
Written on October 15, 2009
If only everyone had Goldman Sachs Group Inc’s chief problem — too much success leading to a surplus of riches.
It’s a growing public relations nightmare for Wall Street’s dominant firm as it prepares to report another round of robust profits and update its bonus pool, which is on a pace to top $20 billion for the year.
That Goldman is headed for record bonuses so soon after repaying a $10 billion government bailout is unlikely to play well in Washington or on Main Street at a time when the jobless rate is soaring and consumers are hurting, image consultants said.
In fact, the story of Goldman’s bonus pool is overshadowing how well the firm is performing, and how it handles the criticism will shape its image for a long time to come, they said.
Explaining that earnings are not just cash rewards, but based on performance and largely paid in stock, will be central to justifying them to the public.
Chiefly, Goldman will need to show that the wider community can share in its success and wealth. This could involve some kind of charitable initiative.
“They have got to embrace the idea that they are part of the face of Wall Street and part of the ‘enemy list’ in America right now,” said Jesse Derris, a crisis communications consultant with Sunshine, Sachs & Associates.
“They need to respond and talk and embrace the idea of speaking with the media in a much smarter way,” said Derris, who represents John Thain, a former Goldman executive and former Merrill Lynch chief executive who had a major image problem over excessive compensation and perks earlier this year.
The criticism leveled at Goldman has reached a fever pitch in recent months, with talk-show hosts and magazines using the firm’s wealth and government connections as fodder. Most famously, a Rolling Stone magazine article labeled the firm a “vampire squid wrapped around the face of humanity.”
Wednesday, on the eve of Goldman’s third-quarter earnings announcement, four organizations with religious ties, including the Benedictine Sisters of Mt. Angel, Oregon, urged Goldman’s board to review pay practices at the firm.
Goldman CEO Lloyd Blankfein has been in the public arena in recent weeks, speaking about the company’s strategy and even addressing questions about bonuses.
This month alone he has been interviewed for a Wall Street Journal story, penned a column for the Financial Times, and is scheduled for a breakfast with Fortune magazine. He appeared last month at the Clinton Global Initiative to speak about Goldman’s 10,000 Women initiative, a program that has invested millions in educating underserved women across the world.
More charity could be on the way, news reports have suggested. CNBC reported this week that Goldman might ask its employees to devote a portion of their bonuses to charitable causes. It was not clear how much they might donate or who would receive the money.
A SERIOUS APPROACH
A Goldman plan for giving to charity would be a serious approach to handling concerns about its bonus pool, said Michael Robinson, a financial and crisis public relations consultant with Levick Strategic Communications. But he cautioned that Goldman cannot do it as a one-time thing.
Filed in: legal.