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Goldman Sachs Cuts CEO Bonus and Other Benefits Due to Pressure |
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Monday, 15 February 2010 |
Goldman Sachs’ chief executive will likely receive a much smaller compensation package than his previous $67.9 million total in 2008. In response to ongoing criticism and in an effort to appease regulators, Goldman has altered its system of awarding bonuses. Compensation for top executives was halted after the third quarter in 2009, managers received bonuses in stock rather than in cash, and the company made $500 million in charitable donations.
Some in the industry have figured that Lloyd Blankfein will receive about $40 million for 2009, given Goldman’s earnings of $13.39 billion. He did not receive a bonus in 2008 at the height of the financial crisis. The Times of London has suggested that he might receive a bonus of $100 million, which would be a blow to President Obama and his current criticism of excessive executive pay in the financial sector given the benefits they received from the federal bailout.
Although political and societal pressure could curb the compensation awarded to Mr. Blankfein, other lesser executives might reap greater rewards for their role in Goldman’s record profits this year. It is not unlikely that the executives heading bond, stock, currency and commodity sales could enjoy bonuses in the amount of $20 million. All bonuses will likely be made in stock rather than in cash, in keeping with current practices on Wall Street. The new bonus system is intended to help limit risk in the financial industry.
It is unlikely that the reduction of executive pay from $67.9 million to $40 million or the change to bonuses in stock rather than cash will satisfy angry American taxpayers who feel they have shouldered the cost of propping up the financial markets. For those Americans still feeling the effects of the economic downturn, these changes will seem to be cosmetic at best.
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