Goldman nixes cash bonuses for top execs

CEO Lloyd Blankfein and 29 other members of firm's management committee will instead get restricted stock; company also institutes shareholder 'say on pay'.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By David Ellis, CNNMoney staff writer

chart_goldman_pool_sharks2.04.03.gif

NEW YORK (CNNMoney.com) -- Top executives at Goldman Sachs will not be paid cash bonuses this year, the company said Thursday.

In the face of public outrage over Wall Street bonuses, the company said that its 30-member management committee will receive restricted company stock instead.

Goldman Sachs' (GS, Fortune 500) bonus pool is currently on track to hit $21 billion for 2009, which would match the record amount the company paid out in 2007.

But while this new pay policy is making headlines, it will only affect a handful of Goldman's 32,000 worldwide employees, leaving the bulk of its bonus pool intact.

In any given year, the members of the management committee typically claim anywhere from 1.5% to 2.5% of the total bonus pool, according to Russell Miller, managing director with ClearBridge Compensation Group in New York.

Using the high end of the estimate, that means top executives would split about $315 million, which comes to roughly $10.5 million each.

"It is a small fraction of the total, but a meaningful amount to each individual," said Miller.

That leaves more than $20 billion for the company to dole out to middle management and lower level employees.

Goldman has tried to tame the public furor over speculation that the company is on track to pay some of its biggest bonuses since the financial crisis erupted. Americans have become particularly incensed after forking over billions of dollars to keep the firm from going under last fall.

Thursday's announcement includes additional bonus restrictions. The management committee won't be able to sell the shares they're awarded for five years.

Additionally the firm is beefing up accountability even after these bonuses have been issued. A new provision will allow Goldman to take back these shares in the event that an employee "engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks."

The company also announced Thursday that it will give investors an advisory vote, or "say on pay," for its top executives at next year's shareholder meeting.

Blankfein defended the board-mandated changes Thursday, noting that they were part of of a larger plan to revamp the company's compensation practices announced last spring.

"We believe our compensation policies are the strongest in our industry and ensure that compensation accurately reflects the firm's performance and incentivizes behavior that is in the public's and our shareholders' best interests," he said in a statement. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.