Goldman Sachs Won't Pay Cash Bonuses To Top Execs But...

Lloyd Blankfein. i

Lloyd Blankfein, Goldman Sachs' CEO, will be taking home less cash this year along with 29 other top executives. Alessandro della Valle/AP Photo/Keystone hide caption

toggle caption Alessandro della Valle/AP Photo/Keystone
Lloyd Blankfein.

Lloyd Blankfein, Goldman Sachs' CEO, will be taking home less cash this year along with 29 other top executives.

Alessandro della Valle/AP Photo/Keystone

Wall Street investment banker Goldman Sachs is giving in to its investors who had complained about the size of the company's bonus pool and argued that the company should be funneling more of its profits to its shareholders.

There's also the not-so-little image problem the company has suffered generally as critics have stewed about Goldman paying its execs big bonuses while millions of Americans worry about their unemployment benefits running out or being foreclosed on.

The company announced Thursday that its top 30 managers won't be getting cash bonuses this year. Instead, they'll be getting the value of their bonus in Goldman stock which they must hold onto for five years.

Goldman also has a clawback feature in the new compensation package that will allow the company to yank back shares from employees who don't exercise appropriate judgment in the investment decisions they make on behalf of the bank or its clients.

An excerpt from Goldman's press release:

* The firm's entire 30-person management committee, which comprises all global divisional and regional leadership, will receive 100 percent of their discretionary compensation in the form of Shares at Risk, which are subject to restrictions for five years. Discretionary compensation represents the vast majority of senior management's compensation and is directly tied to the firm's overall performance.

* Shares at Risk cannot be sold for five years, in addition to other restrictions.

* The five-year holding period on Shares at Risk includes an enhanced recapture provision that will permit the firm to recapture the shares in cases where the employee engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks. Enhancing our recapture provision 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.

In another move to placate investors, Goldman said it will allow shareholders to have an 'advisory vote on the firm's compensation principles..." Advisory means the company's board and top executives don't have to abide by the outcome of such a vote if they don't w ant.

There'll still be a lot of money flowing to employees. As NPR's Jim Zarolli reports in a report fir the network's newscast:

The company has had a highly profitable year because of trading gains and its 31,000 employees are supposed to get average bonuses of about $700,000. Goldman defended the bonuses at first but more recently has taken steps to appease its critics.

Goldman has reportedly set aside almost $17 billion to pay out this year's bonuses.



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