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Goldman's Bonus Plan Draws More Fire

NEW YORK ( TheStreet) -- Goldman Sachs (GS - Get Report) may have forgotten that investors are taxpayers, too.

Some large Goldman shareholders are reportedly unhappy with the firm's plans to pay big bonuses this year -- a rare example of Wall Street and Main Street being on the same side of an issue.

From bonus and dividend payments to the amount of leverage and lending they're engaged in; the government has kept a firm grip on the banking sector over the past year. It has used both carrots and sticks to achieve its goals, with varying success -- financial incentives to rework bad mortgages have been effective, but its notion to create a "pay czar" may have been doomed since the brainstorming session for his title.

Banker pay has been a lightning rod, not just for the seven firms whose compensation is closely monitored by the czar, Kenneth Feinberg, but also for healthy, profitable banks like Goldman that are struggling to move past the bailout stigma. Feinberg has flexed his muscle already, nixing some pay practices at American International Group (AIG - Get Report), Citigroup (C - Get Report), Bank of America (BAC - Get Report) and others.

The banking industry, and many investors, appeared as though they just wanted to get past the compensation "scandals." They were content with revisions that tied compensation more closely to long-term performance; for example, by weighting pay in stock that doesn't vest for a few years.

But on Friday, the Wall Street Journal reported that "some of the largest shareholders," who hold tens of millions of Goldman shares, are unhappy with its pay practices, and have been urging management to reduce its 2009 bonus pool. The news was a headscratcher, since Goldman appeared to have done everything right from a stockholder point of view.

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