It’s interesting how, in the hands of a mildly talented PR department, just about any management decision whatsoever can be spun as a defense of shareholder interests:
The financial giant Goldman Sachs spent tens of millions of dollars to bail out two senior executives last fall who were short on cash, according to the bank’s proxy statement filed on Friday.
In an unusual move, Goldman bought back stakes in some internal investment funds from Jon Winkelried, the bank’s co-chief operating officer, and Gregory K. Palm, its general counsel.
Both executives are among the largest shareholders in the bank, owning more than a million shares each, and directors were concerned that a large sale of Goldman shares by the two men would alarm investors during a period of market turmoil, according to a person briefed on the matter.
An alternative strategy would have been to just let the executives sell their shares and then have Goldman allocate the tens of millions of dollars to share buybacks or other direct means of using cash to reassure investors. But that wouldn’t have produced a personal windfall for powerful managers, so it didn’t happen. Alternatively, if you’re in the grips of the neoclassical faith then it must be the case that this is Goldman acting responsibly rather than its managers looting during a crisis from a firm that would be going out of business absent government intervention.