NEW YORK — Goldman Sachs Group Inc. on Thursday sought to deflect criticism about sky-high compensation by drastically cutting back how much it put into its bonus pool and giving $500 million to charity.
The investment bank reported blowout fourth-quarter earnings, driven in part because it restrained compensation amid a public outcry about excessive compensation and perceived arrogance. It posted a profit of $4.95 billion, or $8.20 a share, on revenue of $9.62 billion.
Analysts surveyed by Thomson Reuters predicted $5.20 a share and revenue of $9.65 billion.
Goldman Sachs had been on track to report more than $20.2 billion in compensation for 2009, which would have been the highest in its 140-year history. However, it ended the year with $16.2 billion in the pool by not setting aside any money toward compensation during the fourth quarter and taking money out of the bonus pool for charity.
The move could help Goldman sidestep criticism amid a public outcry that executives were expected to get record payouts so soon after the company received $10 billion in bailout funds. President Obama is expected later Thursday to propose limits on the size and risk-taking of the nation's biggest banks.
Goldman has tried to deflect criticism by announcing that top executives will not receive cash bonuses this year, and instead receive stock that cannot be sold for at least five years. But, the new policy only affected the top 30 bankers, while more than 31,000 other employees don't fall under the restrictions.
Results during the fourth quarter reflect a major rebound from the depths of the financial crisis. In the year-earlier period Goldman had a loss of $2.29 billion, or $4.97 a share, on negative revenue of $1.58 billion. The prior-year period ended on Nov. 28, before the company shifted to a different reporting calendar.
Chairman and Chief Executive Lloyd C. Blankfein said its strong results, "as well as recognition of the broader environment, resulted in our lowest ever compensation to net revenues ratio." He went on to say that "despite significant economic headwinds, we are seeing signs of growth."
Fixed-income trading slowed after extraordinary profits in the past three quarters. Revenue from fixed income, currency and commodities was $3.97 billion, down from the $5.99 billion last quarter.
But investment banking revenue moved higher, after falling almost a third in the third quarter. It rose 82% from the previous quarter to $1.64 billion.
Revenue from principal investments, those made with the firm's own capital, fell from the previous period.
The investment bank's impressive results in 2009 propelled it further ahead of rivals, many of which have struggled to overcome the credit crisis. Goldman has been able to take on more risk and grab market share while competitors were licking their wounds.
Shares were up 1% premarket at $169.72. The stock doubled in 2009 but is been down slightly for the year to date.