Courtney Comstock | Oct. 4, 2010, 5:16 AM | 2,454 | comment 4

pat-the-dog-headAbout 100 London-based Goldman partners earned an unusual mid-year bonus of tens of millions of pounds in stock this August.

From Sky News:

Goldman Sachs has secretly handed its top London-based employees tens of millions of pounds-worth of free shares following a decision to cap their pay in the wake of this year's Labour Government tax on bank bonuses.

There are two issues here - how they got the bonuses and why. The bonuses represent an interesting compromise between Goldman, its partners, and the FSA.

Goldman had to deal with the FSA curtailing bonuses on one side and about 100 of their London-based partners requiring, if not asking, for an extra bonus to make up for a low-paying 2009 on the other side.

Many Goldman partners left after a one million pound bonus cap was put on their bonuses last year, and those who remain are apparently "frustrated" with their pay, says the Wall Street Journal.

So Goldman had to pay their partners early in order to compete with higher bidders.

The partners are frustrated because the year 2009 would have been a huge bonus year for everyone at Goldman were it not for the FSA's cap on their bonuses. And some of them have already left, so it was time for Goldman to reward the loyalty of those who remained and got paid less than their counterparts at hedge funds.

Goldman apparently came to an agreement with the FSA to allow for this one-time bonus. The Wall Street Journal says they "approved" the mid-year stock handout, which isn't redeemable for 5 years and is subject to clawbacks.

But the FSA wouldn't comment for either the WSJ or SkyNews.