The US investment bank Goldman Sachs says its 30 top managers will receive no cash bonuses this year. They will instead have to make do with shares which they will be banned from selling for five years and could lose if they fail to raise concerns over risk.
Goldman has been portrayed as one of the chief villains of the credit crisis and has been facing mounting criticism over what could prove to be a record bonus pool that is expected to lead to an average payment of $700,000 (£430,000) to its 31,000 employees across the world.
Some $17bn was set aside during the first three quarters of the year, despite the bank receiving a $10bn bailout from the US government, although that has been repaid.
Lloyd Blankfein, chief executive, said yesterday: "The measures that we are announcing reflect the compensation principles that we articulated at our shareholders' meeting in May. We believe our compensation policies are the strongest in our industry and ensure that compensation accurately reflects the firm's performance and incentivises behaviour that is in the public's and our shareholders' best interests."
Mr Blankfein created a storm when he was reported to have said he was only a banker "doing God's work" in an unguarded moment during an interview. His bank has been struggling to deal with an outpouring of public anger, which has threatened to put the company in the sort of public relations trough once experienced by Wal-Mart or Exxon.
The bank said its "enhanced recapture rights" over shares granted to employees "build off an existing claw back mechanism which goes well beyond employee acts of fraud or malfeasance and includes any conduct that is detrimental to the firm, including conduct resulting in a material restatement of the financial statements or material financial harm to the firm or one of its business units".
Shareholders will get an advisory vote on the firm's pay policies and the compensation of named executives at the firm's annual meeting next year, a facility that shareholders in British banks already enjoy.
Goldman, like all other banks operating in the City of London, is set to face a 50 per cent tax on bonuses above £25,000 paid to its London-based staff under the one-off "supertax" announced by Alistair Darling, the Chancellor, on Wednesday. It is widely expected that a similar tax will be imposed in France.Reuse content