Analysis: Goldman's top brass gun for cash bonuses

Wed Feb 22, 2012 2:36pm EST
 
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By Jed Horowitz

(Reuters) - While Wall Street slashes pay and freezes cash awards, Goldman Sachs Group's (GS.N: Quote) top five executives may reap special bonuses of $10.5 million apiece if the firm hits historically easy profit targets over the next two years.

Many companies have long-term incentive plans, but Goldman's program is notable for dangling hefty cash payouts at a time when banks are tilting toward deferred-stock awards.

Post-bailout anger at Goldman was still strong when the cash bonus plan was introduced a year ago, but the Occupy Wall Street movement had not yet made income inequality a hot-button political issue.

The program is now also playing out against stark internal conditions. Wall Street firms -- including Goldman -- are laying off thousands of employees, capping cash portions of bonuses and requiring repayment of past bonuses if profits prove to be fleeting, illegal or the result of excessive risk-taking.

Morgan Stanley this year capped cash bonuses for bankers and traders -- who often receive millions of dollars in cash -- at $125,000.

Bank of America (BAC.N: Quote) limited its top bankers to $150,000 in cash.

In Europe, Credit Suisse Group CSGN.VX cut bonuses by 41 percent and BNP Paribas Group BNPPL.UL by about 50 percent while Deutsche Bank AG (DBKGn.DE: Quote) lowered the cash component of its short-term bonus plan by 37 percent. Barclays PLC (BARC.L: Quote) cut its bonus pool by one-third and Lloyds (LLOY.L: Quote) is pulling back 40 percent of its former chief executive's 2010 share bonus as a result of an illegal insurance scheme.

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Chief Executive Officer of Goldman Sachs Lloyd C. Blankfein talks during a business roundtable event at the U.S. Chamber of Commerce in Washington February 14, 2012.    REUTERS/Larry Downing