Amid the growing uproar over exorbitant executive salary, financial services firm Goldman Sachs has said its top 30 executives will receive their annual bonuses only in stocks rather than cash this year.
The company's 30-person management committee, including chairman and chief executive officer Lloyd Blankfein, chief financial officer David Viniar and leaders of the firm's global and regional divisions, would get bonuses in stocks, which cannot be sold for five years.
"The firm's entire 30-person management committee, which comprises all global divisional and regional leadership, will receive 100 per cent of their discretionary compensation in the form of Shares at Risk, which are subject to restrictions for five years," Goldman Sachs said.
According to reports, earlier top executives of Goldman received their bonuses in the ratio of 70 per cent stocks and 30 per cent cash, with the bonuses vesting over four years. The moves comes amid a public furore worldwide over huge bonuses and incentives paid to bankers, which is widely believed to one of the causes for the global financial crisis. Earlier this week, the UK government proposed a temporary 50 per cent tax on bonus payout for the bankers.
The government added that it attached great importance to tackling remuneration practices that contributed to excessive risk- taking by the banking industry.
Further, Goldman Sachs said shares can be taken back in cases employees are engaged in materially improper risk analysis or fail to raise concerns about risks.
The board of directors have approved changes in the compensation policy for 2009, and shareholders would have an advisory vote in the compensation of its named executive officers at the firm's annual meeting of shareholders in 2010.
The move of share recapturing would ensure that 'our employees are accountable for the future impact of their decisions, to reinforce importance of risk controls to the firm and to make clear that our compensation practices do not reward taking excessive risk,' the statement added.
"The measures that we are announcing today reflect the compensation principles that we articulated at our shareholders' meeting in May," Goldman Sachs Group chairman and CEO Lloyd C Blankfein said.
"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," Blankfein added.
"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," Blankfein added.
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