http://sg.news.yahoo.com/afp/20090408/tts-finance-economy-us-company-pay-goldm-972e412.html
WASHINGTON (AFP) - - Goldman Sachs chief Lloyd Blankfein said Tuesday that company performance should determine employee pay, rejecting the idea of giving bonuses despite poor business that has sparked public outrage.
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"Employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak," Blankfein, chairman and chief executive of the Wall Street bank, told an institutional investors conference in Washington.
Employees' performance should not be considered on an individual and isolated basis, he said, in an oblique reference to the howl-raising 165 million dollars in bonuses paid by government-rescued insurer AIG after posting a historic loss of 99.3 billion dollars in 2008.
Blankfein said he favors compensation in the financial industry that includes an annual salary and stock options. The bigger the compensation, the greater the share should be in equities.
For senior employees, "most" of the compensation should be in deferred equity. "Only the firm's junior people should receive the majority of their compensation in cash," he said.
Blankfein said that an employee's performance should undergo a multi-year review "to avoid excessive risk taking and allow for a 'clawback' effect." All equity awards should be subject to a three-year review.
Senior executives should not be allowed to sell the "bulk" of the equity compensation until they retire from the company.
"Compensation should reflect an individual's ability to identify and create value, including his or her contribution to the client franchise, enhancing the firm's reputation and contributing to the better functioning and efficiency of markets," he said.
In September, after fiscal third-quarter profits plunged 70 percent from a year earlier amid a global financial meltdown, Goldman Sachs converted to a bank-holding company allowing it to dip into the Federal Reserve's bailout plan for commercial banks.
At the end of October, Goldman received 10 billion dollars in public aid in return for a part of its capital under the bailout plan of then-Treasury secretary Henry Paulson, a former Goldman CEO.
Goldman Sachs announced last November that Blankfein and six company leaders had renounced their 2008 bonuses due to the company's poor performance in the fiscal year that ended that month.
WASHINGTON (AFP) - - Goldman Sachs chief Lloyd Blankfein said Tuesday that company performance should determine employee pay, rejecting the idea of giving bonuses despite poor business that has sparked public outrage.
ADVERTISEMENT
"Employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak," Blankfein, chairman and chief executive of the Wall Street bank, told an institutional investors conference in Washington.
Employees' performance should not be considered on an individual and isolated basis, he said, in an oblique reference to the howl-raising 165 million dollars in bonuses paid by government-rescued insurer AIG after posting a historic loss of 99.3 billion dollars in 2008.
Blankfein said he favors compensation in the financial industry that includes an annual salary and stock options. The bigger the compensation, the greater the share should be in equities.
For senior employees, "most" of the compensation should be in deferred equity. "Only the firm's junior people should receive the majority of their compensation in cash," he said.
Blankfein said that an employee's performance should undergo a multi-year review "to avoid excessive risk taking and allow for a 'clawback' effect." All equity awards should be subject to a three-year review.
Senior executives should not be allowed to sell the "bulk" of the equity compensation until they retire from the company.
"Compensation should reflect an individual's ability to identify and create value, including his or her contribution to the client franchise, enhancing the firm's reputation and contributing to the better functioning and efficiency of markets," he said.
In September, after fiscal third-quarter profits plunged 70 percent from a year earlier amid a global financial meltdown, Goldman Sachs converted to a bank-holding company allowing it to dip into the Federal Reserve's bailout plan for commercial banks.
At the end of October, Goldman received 10 billion dollars in public aid in return for a part of its capital under the bailout plan of then-Treasury secretary Henry Paulson, a former Goldman CEO.
Goldman Sachs announced last November that Blankfein and six company leaders had renounced their 2008 bonuses due to the company's poor performance in the fiscal year that ended that month.
