New York: US investment giant Goldman Sachs said all 2009 bonuses for top executives would be in the form of restricted stock instead of cash under a new policy aimed at discouraging excessive risk-taking.
The firm's 30-member management committee will receive bonuses in the form of shares that cannot be sold for five years, Goldman Sachs said in a statement.
The holding period includes a provision that will permit the firm to recover the shares "in cases where the employee engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks," the company said.
The move "is intended to ensure that our employees are accountable for the future impact of their decisions, to reinforce the importance of risk controls to the firm and to make clear that our compensation practices do not reward taking excessive risk," Goldman Sachs said.
Goldman Sachs announced the change to its compensation policy was approved by its board of directions, and would be submitted to shareholders for an advisory vote in 2010.
The action comes amid a public outcry in the United States and elsewhere over bonuses and perks for executives at banks, viewed by many as responsible for the global financial crisis.
"We believe our compensation policies are the strongest in our industry and ensure that compensation accurately reflects the firm's performance and incentivizes behavior that is in the public's and our shareholders' best interests," said Lloyd Blankfein, chairman and chief executive.
"In addition, by subjecting our compensation principles and executive compensation to a shareholder advisory vote, we are further strengthening our dialogue with shareholders on the important issue of compensation."
Last year, Blankfein and six top Goldman executives renounced their bonuses, amid fears of a backlash in view of a deepening financial crisis. Many other banks followed suit.
In 2007, despite a looming mortgage crisis, Blankfein received a Wall Street record-setting 68 million dollar bonus payment on top of his annual salary of 600,000 dollars.
The action by Goldman Sachs came as Britain and France urged world leaders to impose a tax on bankers' bonuses and consider a tax on financial transactions.
Britain announced Wednesday it was slapping a one-time 50 percent tax on bonuses above 25,000 pounds (27,600 euros, 40,700 dollars) to recoup cash spent saving the financial sector during the crisis.
France's Les Echos financial daily reported Thursday that France wanted to follow Britain's lead and place a 50 percent tax on bank bonuses over 27,000 euros (40,000 dollars).
Bureau Report
First Published: Thursday, December 10, 2009, 23:53