Top executives at Goldman Sachs Group Inc., have decided to forgo their 2008 bonuses, giving up potentially tens of millions of dollars in payouts in a year that saw market meltdown and economic downturn, a media report said on Monday.
The Wall Street Journal said the move, which is being closely watched, may be followed by other players at Wall Street.
After months of internal debate at Goldman, the paper said the seven top executives at the firm, including CEO Lloyd Blankfein, asked the board’s compensation committee to grant them no bonuses. The board approved the request on Sunday.
The executives will be eligible for only their base salary, which is $600,000 for each. A company spokesman said the executives felt it was “the right thing” to do.
“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 told the Journal.
The paper said it is not clear whether other firms will follow suit.
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Spokespersons at Morgan Stanley and Merrill Lynch and Co. were quoted as saying that no compensation decisions have been made yet. Morgan Stanley CEO John Mack took no bonus in 2007 after the firm suffered a Q4 loss.
Just a year ago firms across Wall Street were still more or less untouched by the mortgage meltdown and were ringing up record profits. Blankfein took home $68.5 million in cash and stock in 2007, a record payday for the head of a publicly-traded securities firm, the paper said.
But over the past year, mortgage-related losses have slammed the firms, starting in March with the shotgun wedding of Bear Stearns Cos. With J P Morgan Chase and Co. Then, in September, Lehman Brothers Inc. Filed for bankruptcy protection and Merrill Lynch agreed to be bought by Bank of America Corp.
Goldman, the Journal noted, has fared better than other firms, but its stock is down more than 60 per cent this year. Analysts are predicting it is on course to post its first quarterly loss as a public company in December when it reports its fourth-quarter earnings.