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
Updated September 17, 2011 and originally published November 17, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.