No Bonus for Goldman Executives

Gini's picture
Rank: Orangutan | 273

Just read this on WSJ.

Top Goldman Sachs Executives Will Not Receive Bonuses for 2008

The seven top executives at Wall Street firm Goldman Sachs Group Inc. will not receive bonuses for 2008, according to a Goldman spokesman.
The executives, including firm Chief Executive Officer and Chairman Lloyd Blankfein, asked the board's compensation committee that they receive no bonus and the board Sunday approved the request. As a result, the executives will only be eligible for their base salaries, $600,000 for each of the seven executives. In 2007, Mr. Blankfein took home $68.5 million in cash and stock.
"Our senior officers decided on this course of action because they believe it is the right thing to do," the spokesman said.
It has been a rough year on Wall Street, as massive mortgage losses have caused widespread pain. While Goldman's stock has suffered, down more than 50% since January, it has still faired better than other firms. Rival Lehman Brothers Holdings Inc. filed for bankruptcy in September. As well, Merrill Lynch that same month agreed to sell itself to Bank of America.

But honestly...if I made 68.5 million the previous year, I really wouldn't care at all about getting another bonus. I mean, with that kind of money you can already live like a king until you die. I think I would just quit and have fun:)))

Comments (9)

Nov 16, 2008

Good gesture but they could not make a bonus for the rest of their lives and be perfectly fine..

Nov 16, 2008

This is a move to stem off calls for more regulation of Wall street by the general public. They don't want to be taking massive bonuses when everyone is looking.

Nov 16, 2008

This doesn't really come as a surprise (was treaury money really going to go indirectly towards executive bonuses?) Hopefully other banks follow GS's lead to help mitigate the rising sentiment against wall street

Nov 16, 2008

Goldman Chiefs Give Up Bonuses
Seven Top Executives to Forgo Millions in 2008; Move Could Pressure Other Firms

In a closely watched move that may be followed across Wall Street, the top executives at Goldman Sachs Group Inc. have decided to forgo their 2008 bonuses. In doing so, they are giving up potentially tens of millions of dollars in payouts in a year that reshaped the securities industry.

After months of internal debate at Goldman, the seven top executives at the firm, including Chief Executive Officer Lloyd Blankfein, asked the board's compensation committee to grant them no bonuses. The board approved the request on Sunday.
The executives will only be eligible for their base salaries, $600,000 for each. A firm spokesman said the executives felt it was "the right thing" to do.
"While the firm has distinguished itself through many aspects of the crisis, we cannot ignore the fact that we are part of an industry that is directly associated with the ongoing economic distress," the firm spokesman said late Sunday.
It isn't clear yet whether other firms will follow suit. Spokeswomen at Morgan Stanley and Merrill Lynch & Co. said no compensation decisions have been made yet. Morgan Stanley CEO John Mack took no bonus in 2007 after the firm suffered a fourth-quarter loss.
Just a year ago firms across Wall Street were still more or less untouched by the mortgage meltdown and were ringing up record profits. Mr. Blankfein took home $68.5 million in cash and stock in 2007, a record payday for the head of a publicly-traded securities firm.
But over the past year, mortgage related losses have slammed the firms, starting in March with the shotgun marriage of Bear Stearns Cos. to J.P. Morgan Chase & Co. Then, in September, Lehman Brothers Holdings Inc. filed for bankruptcy protection and Merrill Lynch agreed to be bought by Bank of America Corp.

Goldman has fared better than other firms, but its stock is down more than 60% this year. Analysts are predicting it is on course to post its first quarterly loss as a public company in December when it reports its fourth-quarter earnings.
The debate over bonuses and how much should be paid out has been raging for months across Wall Street. Some investment bankers have argued that even if it was an ugly year, only a handful of people are responsible for the losses and not everyone should be punished for that.
The decision at Goldman doesn't mean everyone at the firm will go home empty-handed. The firm still has to reward its roughly 30,000 employees. Distinctions are being made between the highest-ranking executives and lower-level traders and investment bankers, according to people familiar with the matter. Many of these employees performed well in 2008 despite the market turmoil, these people say, but could get plucked away by rival firms if compensation practices are significantly altered.
The move on the part of Goldman's top executives is expected to set the tone for the rest of Wall Street, where bonuses are typically many times bigger than base salaries. At many financial firms, about half of all revenue is allocated to compensation, and multimillion-dollar bonuses are routinely paid out to ensure the best talent stays put. Top traders and bankers on Wall Street typically make a base salary of about $250,000, with the rest coming as a bonus. Employees tend to get their bonus numbers in the first two weeks of December -- with the cash coming early in the New Year.
Goldman's decision may make it hard for other firms to pay their top people anything above their base salary, especially since compensation at the highest level is publicly disclosed. Some executives at other firms have joked about an ongoing "Lloyd watch," referring to Goldman CEO Mr. Blankfein: "If Lloyd doesn't take home a bonus no one will," said one senior executive at another firm.
Since the start of 2002, Goldman, Morgan Stanley, Merrill, Lehman and Bear have paid a total of $312 billion in compensation and benefits to its employees. But this compensation model has come under pressure since the Treasury Department recently announced plans to inject capital into financial institutions. Goldman is among the initial nine companies getting a combined $125 billion in government capital. That's fueled worries that taxpayer funds will be used to essentially subsidize Wall Street bonuses.
Regulators including New York Attorney General Andrew Cuomo have asked firms for information about compensation plans. Mr. Cuomo said Sunday that Goldman Sachs "has taken an important step in the right direction," adding, "we strongly encourage other banks to follow Goldman Sach's step."
The compensation change affects Mr. Blankfein and his two co-presidents, Gary Cohn and Jon Winkelried. Each made a total of $67.5 million in 2007. Vice chairmen J. Michael Evans, Michael Sherwood and John Weinberg as well as Chief Financial Officer David Viniar will also take home just their base salary for 2008. Through a company spokesman, all seven declined to comment.

Nov 17, 2008

10 free bananas to the first user that can tell me who the cartoon character in this thread is...

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Nov 17, 2008

Richie rich

Nov 17, 2008

Richie rich

eat up.

Nov 17, 2008

personally, i hope bonuses go down significantly for this year. i think the amount of attrition will actually not be too bad, and compensation in following years can make up for it. right now banks need to preserve capital, and just giving away 6 bn for GS/ms seems like not the best idea

obviously since im not in the industry (but hoping to be next year), this compensation scheme would work well for me...

Nov 17, 2008