Corporate Governance

Goldman Sachs, Bonuses and the Compensation Committee

By J. Robert Brown

Goldman Sachs disclosed that the top seven executive officers would receive no bonuses for 2008.  According to the WSJ, they will only receive their $600,000 base salary.  By comparison, the total compensation for the CEO, Lloyd Blankfein, was $68.5 million in 2007.  

The decision is a wise one.  Given the outcry about executive compensation, particularly in the financial sector, this is not a time to attract attention through lavish bonuses.  The most noticeable thing about the decision, however, was that it came from the exectives and did not represent an example of leadership from the board.  The WSJ noted that the CEO and the executives "asked the board's compensation committee that they receive no bonus and the board Sunday approved the request."  

It is the case that in this turmoil, the board's role has still largely escaped attention.  Similarly, the duties imposed on boards that allowed some of this turmoil to occur have remained unchanged.  In this case, Goldman Sachs as an entity showed some leadership, but not its board.

Full post as published by The Race to the Bottom on November 17, 2008 (boomark / email).