Today's announcement comes several weeks after Goldman made two other major moves that critics suspect were designed to rehabilitate the firm's battered image.
Goldman said last month it would join forces with billionaire investor and Goldman stakeholder Warren Buffett on "10,000 Small Businesses."
The program will provide capital to small businesses in underserved areas and education aid to small business owners. The $500 million small business program amounts to less than 3 percent of Goldman's employee compensation pool.
On the same day of Goldman's small business announcement, Goldman CEO Blankfein generated headlines for remarks he made at a corporate conference. Blankfein, who drew criticism earlier in the month for saying Goldman was doing "God's work," offered an apology for mistakes the bank made in the lead-up to the financial crisis.
"We participated in things that were clearly wrong and have reason to regret," Blankfein said during his remarks at the National Association of Corporate Directors in New York City, where he was honored as CEO of the year. "We apologize."
The federal government has trumpeted restricted stock awards as a way to ensure financial firm employees don't take the kinds of excessive risks that helped plunge the world into a financial crisis last year.
Steven Hall, a New York-based executive compensation consultant with Steven Hall & Partners, said the changes announced by Goldman were substantive. Hall said the new compensation plan sent a message to the top managers that the bank will "hold your feet to the fire and make sure we run this company in the right way for shareholders and everyone else involved in it."
The changes, however, also reflect the bank's attempt to deflect potential criticism of how much the executives are eventually paid.
"If you see huge payouts to these people, and huge is always relative for investment bankers," Hall said, "you may get some push back or criticism from people upset that the government came along and bailed them out and now the executives are making a lot of money after the fact."
"It is a better form of compensation as it does link employees more to other shareholders, but the fact still is they are still paying out significant amounts of money to the employees," said Charles Elson, the director of the corporate governance center at the University of Delaware.
Elson said the bank is trying to make compensation more palatable for the general public, but in the end, millions in stock or cash or both is still millions of dollars and the public and politicians may not see the difference.
"I think they still have reason to be concerned," he said.
Count Anna Burger among those still concerned.
Burger, the secretary-treasurer of the Service Employees International Union, a staunch critic of the investment bank, said she wasn't impressed by Goldman's compensation announcement.
"If Goldman thinks that's going to make taxpayers, workers or their shareholders happy, I think they have another thing coming," she said today.
The firm, she said, hasn't done enough to fight unemployment and home foreclosures.
"We bailed them out, we helped them turn their business around," she said. "They're now making profits and they've done nothing for America."
ABC News' Alice Gomstyn and Zunaira Zaki contributed to this report.