Goldman Sachs bankers won't receive cash bonus

Goldman Sachs bankers

Following the row over bankers' bonuses, Goldman Sachs have said that 30 of their highest paid bankers will not receive a cash bonus this year, as the bank attempts to fall into line with public and political opinion.

Goldman, among the most successful financial firms throughout the crisis, has been a target for criticism over the bankers' bonus row even though it has repaid a government capital injection.

Instead of a cash bonus, the bank's 30-strong management committee, led by chief executive Lloyd Blankfein, who was paid US$68.5 million in cash and shares in 2007, will instead receive their bonuses in shares which cannot be sold for five years.

The group includes Goldman's highest paid bankers in London, including vice-chairman Michael Sherwood, who is said to be worth more than GBP£225 million and is on track for a bonus in excess of US$20 million this year, the British paper The Telegraph reported.

The bank's move follows intense media pressure about the potential for a record US$23 billion bonus payout this year, especially given Goldman was the recipient of US$10 billion of US Treasury capital at the height of the global financial crisis.

Yet, the changes are only for 2009 and don't necessarily affect more than 31,000 other Goldman employees, consultants and temporary workers, The Wall Street Journal states.

Shares

The shares can be recovered "in cases where the employee engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks," said the Wall Street firm.

The move "is intended to ensure that our employees are accountable for the future impact of their decisions, to reinforce the importance of risk controls to the firm and to make clear that our compensation practices do not reward taking excessive risk," Goldman Sachs said.

Goldman Sachs announced the change to its compensation policy was approved by its board of directors, and would be submitted to shareholders for an advisory vote in 2010, AFP stated.

Before the financial crisis hit, Goldman's chief executive, Lloyd Blankfein, was the best-paid bank boss on Wall Street, taking home US$68.5 million in 2007, while two of his top lieutenants earned US$67.5 million each.

Total bonus payouts on Wall Street are set to rise 40 percent to US$26 billion this year. The Obama administration has appointed a so-called "compensation tsar", Kenneth Feinberg, to examine pay policies, although his remit only extends to banks being propped up by taxpayers' bailout funds.

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