Goldman Sachs head breaks rank on bonuses
by Gill Montia
Story link: Goldman Sachs head breaks rank on bonuses
Speaking at the Handelsblatt banking conference in Frankfurt yesterday, the chief executive of Goldman Sachs sympathised with public outrage over bankers’ pay, calling it “understandable and appropriate”.
Lloyd Blankfein also advocated a link between bonuses and the long-term profitability of financial institutions, suggesting junior employees receive their rewards in shares, thus strengthening the connection between bonuses and the overall performance of a bank.
On the subject of complex financial instruments, Mr Blankfein admitted that banks lost control and operational risk escalated, finally undermining the stability of the financial system.
Last week, Prime Minister Gordon Brown outlined his latest position on the bonuses paid to bank executives.
In an interview with The Financial Times, he declared that bonuses need to be geared towards the long-term success of a financial institution, adding that they should be clawed back if a bank turns in a poor performance once bonuses have been handed out.