Goldman Exec’s Forgo Bonuses

Over the weekend Goldman Sachs’ announced that CEO Lloyd Blankfein and six other top executives will forgo their 2008 bonuses. The move came as a result of increasing mortgage defaults and declining profits at the Wall Street bank.  Even though Goldman has weathered the financial storm better than their competition, it’s clear that this year’s results are unacceptable to investors.  Analysts expect Goldman to post it’s first quarterly loss in it’s history this coming quarter, and the firm’s share price is off nearly 70% from it’s high.  

I wouldn’t be surprised if the decision was also a way of gaining some good PR.  (Or more likely avoiding bad PR)  After having to take taxpayer money from the TARP, it wouldn’t look good if Blankfein took a $70 million bonus like last year.  Taking a big bonus would have immediately put a target on his head for a congressional tongue-lashing.  

Having declined bonuses, Goldman Sachs has set the precedent for the rest of Wall Street.  I’d look for CEO’s and top officers at the other Wall Street banks to forgo bonus compensation as well.  They simply will not be able to justify taking a bonus when the best of the best (ie: Goldman Sachs) hasn’t taken one.