Goldman Top Executives to Forgo 2008 Bonuses

November 17, 2008

I like this move. Goldman’s reasoning for giving up the bonuses for top executives:

“While the firm has distinguished itself through many aspects of the crisis, we cannot ignore the fact that we are part of an industry that is directly associated with the ongoing economic distress,” the firm spokesman said late Sunday.

Source: Goldman Chiefs Give Up Bonuses ($), WSJ

If Goldman does this despite having a decent year compared to their peers, imagine the pressure it will put on other investment banks to do the same!

As was proved last week in the bonus discussion here on AFM (this post and this post), it’s a touchy subject. I’m a staunch believer that that bonuses should only be paid on company-wide results. If the company has a bad year, then no bonuses should be paid. If the company has a good year, then bonuses should be paid based on performance. In other words, split the pie when there’s a pie to split.

Anyway, I applaud Goldman’s move. I think it’s the right thing to do and I think it sends the right message. Besides, Goldman’s CEO, Lloyd Blankfein, should still have some of that $68.5 million left over from last year!

7 responses to Goldman Top Executives to Forgo 2008 Bonuses

  1. Wow, what heroes. Please note the sarcasm. All the CEO’s of these companies should be taking paycuts based on the simple fact that relative to the average employee American CEO’s make way too much money as it is. It’s not the time for celebrating corporate banking CEO’s, and it never will be.

  2. David,

    I’m not celebrating anything. I merely stated that I liked this move.

  3. It’s important to differentiate between lower level employee bonuses and top executive bonuses.

    For obvious reasons, top executives should be taking a pay cut for their poor leadership. However, it really depends for lower level employees if their bonuses are completely based on company-wide profit or meeting their goals – is it really fair to dock someone for doing their job and meeting their quarterly/yearly goals? I’m not saying lower level employees should get a pat on the back, but neither am I saying they shouldn’t get compensated for working hard.

  4. If you seriously believe they won’t get their bonus money, you need to pull your head out of the sand (Not a personal attack against anybody, just a generalization). These people’s lives are based around doing everything they can to make as much cash. Do you think a lifestyle change is possible for them? No. Their money will come through back channels and either be off the books or disguised. This is just a PR stunt so they don’t get killed by people who lost their jobs.

  5. Only giving up bonus is not going to help? Next smart thing to do is pay reduction for top executives.

  6. I’m with you JLP, I like this move too and I really like the message that I hope it sends to the rest of the crew out there.

  7. I like this move too, but the article makes it sound like the executives did this for good motives but weren’t they supposed to do something like this to get our bailout money?