Tis the season when…the thoughts, hopes, and dreams of those toiling on Wall Street turn to their annual bonus checks. And, after the horror of 2008, when the average Wall Streeter saw his or her bonus shrink 44 percent—or vanish altogether, along with their job—the survivors have been clinging with grim determination to the assurances of their bosses this year will be better. A lot better. “I was told they’d make it right this year,” says the manager of a business division at one of Wall Street’s large surviving firms, who saw most of his bonus evaporate in 2008, despite earning profits within his group.

Wall Street’s leaders—who themselves traditionally pocket the heftiest bonuses of all—would love to follow through on that promise. And for many firms, which have seen profits rebound, the initial omens seemed good. Their revenues and earnings were solid, and, best of all, they were able to wriggle out from beneath the scrutiny of the Obama administration’s new pay czar Ken Feinberg—appointed to monitor pay practices at companies that had accepted bailouts or financial assistance—by repaying their TARP loans. For more than a month, the market has been buzzing about the possibility that the three largest players on the Street—Goldman Sachs, JPMorgan Chase, and Morgan Stanley—may fork over about $30 billion in bonus checks, a 60 percent gain over last year. In some cases—such as Goldman Sachs—compensation seems likely to hit another record. A senior fixed-income trader, Johnson Associates estimated, could pocket $930,000 in total compensation this year, a figure that is roughly 20 times the average household income.

Let’s leave aside the populist outrage that surrounds this kind of figure. Sure, on the other side the Atlantic Ocean, Britain’s Chancellor of the Exchequer Alistair Darling (the English version of Timothy Geithner) announced this week that he plans to yank back half of every bonus check in the shape of a special tax, to be paid by any financial institution on any "discretionary payment" made to any employee. That’s going to hurt institutions enough that they’ll think twice about just who deserves a bonus and which employees will follow through on threats to walk out the door if they don’t get the big bonus they think they deserve. But on this side of the pond, that kind of punitive action was quietly ruled out early this year, when legislators abandoned the idea of pay caps. Even those who argue that Wall Streeters don’t really deserve such a windfall feel squeamish at the idea of the government deciding what pay levels and practices are (or aren’t) acceptable in any government-owned business. That’s up to shareholders and boards of directors to determine.

This holiday season will be the real test of whether the latter groups are up to the job. Thus far, investors in Wall Street firms have been remarkably complaisant as they watch firms like Goldman Sachs pay out as much or more in annual bonuses as they themselves earned in profits. In 2007, for instance, when the bonus pool at Goldman Sachs hit a whopping $12.1 billion, net income attributable to common shareholders was only $11.41 billion. In 2008, the year that Goldman’s share price tumbled 59 percent, the firm paid out half as much in total compensation. But the gap between its bonus pool ($4.8 billion) and net income attributable to common shareholders ($2.04 billion) widened dramatically. And it remains wide: As of the end of the first nine months of the year, Goldman Sachs had reported net income of about $7.4 billion and set aside $16.7 billion in compensation and benefits. (About two-thirds of that compensation takes the form of bonuses, Goldman folks have said.) A Goldman director said Wednesday the firm is taking "a hard look" at its compensation practices.

On Thursday, the firm—the most profitable in the history of Wall Streeet—announced changes in the way it pays its people. Goldman's top executives will give up cash bonuses in exchange for company stock, with certain restrictions. Given that Goldman is at the eye of the bonus storm—after the government’s bailout policies and practices gave the investment-bank-turned-regular-bank’s profits a big boost this year, Goldman is on track to pay out massive bonuses once more—the announcement grabbed the headlines.

At its core, the revised compensation plan means that the 30-person management committee—essentially, the bank’s top leaders—will get all their bonus in the form of what Goldman calls “Shares at Risk.” That stock isn’t really theirs for a period of five years, and if any of those employees do anything to jeopardize the firm’s health, Goldman has the right to “recapture” them—a kind of high-finance repo man will go out and claw them back.

That’s not a new concept—clawbacks and deferred compensation have been at the heart of the debate over just how to go about reforming Wall Street’s over-the-top employee pay plans for most of the last year. The objective of the deferred-compensation plans is to remove any incentive for an employee to take outsize short-term risks in hopes of pocketing a big bonus at year-end; the idea of a clawback goes a step further in that direction.

Goldman’s announcement did include two new concepts, however. The first was overt. Employees will be held accountable not just for direct malfeasance (or stupidity), but for risk-management failures. Specifically, Goldman retains the right to claw back these “shares at risk” if the employee “engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks.” (If anything will focus a trader’s mind on risk long enough to make a difference, it will be the threat of forfeiting some of their rewards—i.e. their bonus.) The second is a nuance, contained in the language used in characterizing the new policy. The new measures “ensure that compensation accurately reflects the firm's performance and incentivizes behavior that is in the public’s and our shareholders’ best interests.” (The emphasis added by StreetWise.) In other words, Goldman has formally acknowledged that simply serving its shareholders and employees isn’t enough, particularly in these days of populist fury directed against Wall Street in general and more specifically against the firm that Matt Taibbi memorably described as a “giant vampire squid” in his Rolling Stone article in July. The reason Goldman and its peers couldn’t be allowed to fail is that the financial system of which they are an integral part is crucial to our national wellbeing. The flip side of that equation is that Goldman and the other financial institutions must recognize the need to behave in a manner that reflects that special status.

It remains to be seen if Goldman will go a step further in the months and years to come in reviewing Wall Street compensation policies, which have been set in stone for decades. This is one small step forward; but we’re still waiting for the big leap.

The heart of the problem is that Wall Street employees have long been paid their bonuses based on the firm’s revenues, rather than profits. That policy—which dates back to the days when most Wall Street firms were still partnerships and there was a big overlap between the shareholders and the recipients of those bonuses—has remained set in stone, even as the structure of Wall Street has changed. (While individual traders and investors may choose to keep a big chunk of their personal wealth in the stock or options issued by their own firm, the proliferation of clever strategies for managing "concentrated wealth" positions means that they are increasingly less obligated to do so, however.)