One of my concerns about the original bailout bill was that the money paid to financial institutions would be used to pay for outsized executive bonuses. While companies must offer outrageous compensation to attract and keep the best executive talent, the market place has forced the price upwards.
That worked well when the financial industry was flush with profits, but you can’t ask for assistance to avoid bankruptcy with one side of your mouth while the other side is pushing money to the top decision makers who oversaw the company’s decline into the abyss.
The Chief Executive Officer of GOldman Sachs, Lloyd Blankfein, and six other executives have announced that they will not accept bonuses for 2008. I hope that this sets a good example for other recipients of funds from the bailout.
Don’t get me wrong; these people are not hurting for cash and will likely not experience any financial difficulty at this time. Their children will still have presents to open this holiday season. But this move sends a signal that it is alright to refuse payment for horrible financial results and I hope more banks follow suit.
Thanks to All Financial Matters, where I first saw this story posted.
Update: UBS has joined Goldman Sachs in the no-bonus crusade.
Blankfein, Goldman Deputies Decide to Forgo Bonuses, Christine Harper, Bloomberg, November 17, 2008
Top Executives at UBS Will Not Get Bonuses, Ben White and David Jolly, New York Times, November 17, 2008
Email this article
Print this article
Share this article: Twitter | Tip'd | Facebook | Delicious | Reddit | Digg
About the Author
{ 4 comments… read them below or add one }
Seeing as Goldman Sachs is also very guilty of taking advantage of their clients and markets over the past decade, I believe their executives are foregoing their bonuses to keep as low a profile as possible. Don’t be surprised to see many of these same “good guys” indicted for various crimes and negligence in the SEC and FBI investigations of how the mortgage market collapsed. This company is the Wall St kingpin and even Hank Paulson will have a hard time hiding.
Lets see, lost a lot of money got a government(taxpayer) bailout. I’m not sure these executives were entitled toa bonus.
Saying Goldman is not seeking government support would be hard to back up. They received a large capital infusion in the first round of TARP investments, they have been borrowing from the Fed at below-market rates since Bear collapsed and they were allowed to convert to a holding company to receive even more Fed aid.
Steve: You’re right, my brain must have slipped. I listed Goldman Sachs among the first recipients of bailout money.