Bloomberg reports that Lloyd Blankfein, Goldman's CEO, has confirmed that he and five of his executives will forgo bonuses this year.
Goldman spokesperson Lucas van Praag said: 'They believe it's the right thing to do. We can't ignore the fact that we are part of an industry that's directly associated with the ongoing economic distress'. Blankfein took a bonus of $68m last year. Also forgoing bonuses along with the boss are CFO David Viniar, and Vice Chairmen Jon Winkelreid, Gary Cohn, Michael Evans and Michael Sherwood.
The news agency also quotes New York State Attorney General Andrew Cuomo, who said: 'This gesture by Goldman Sachs is appropriate and prudent, and hopefully will help Wall Street to its senses. We strongly encourage other banks to follow'. Although the media is reporting that Goldman execs are the first to come out and say that they are forgoing bonuses this year, that's actually not the case. Dick Fuld and his senior cohorts over at Lehman Brothers came out very early this year and said the same thing. Hmmm.........
Reuters reports that, according to Swiss newspaper Sonntag, UBS shareholders are to be given a consultative vote on management pay structures. Although it is thought that pay will not be capped, UBS is thought to be considering implementing a structure which will make it impossible to pay out executive bonuses when the bank is trading at a loss. In addition, payment of bonuses may be deferred for up to 3 years.
Bloomberg also reports that UK Prime Minister Gordon Brown's desire to 'rein in' banking bonuses will be thwarted this year, as banks' contractual obligations will make that impossible. Don't worry, Gordon, the market will sort this out for you. Bonuses will be reined in this year (big time).
Finally, New York City Mayor Michael Bloomberg has come out to defend Wall Street workers and their bonus payouts. Speaking during his weekly radio address, Bloomberg said: 'It's a populist thing to say I don't want to give any bonuses. (But) it's just unrealistic to say that employees for these companies, who work hard, shouldn't get compensated at the rate in that industry'.
'Bloomberg is right, but we all have to realize that the 'rate for the indistry' has been redefined - both in terms of economics (you don't make money, you don't pay bonuses), and in terms of politics (bailed-out banks shouldn't pay bonuses, etc)'.
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