Goldman CEO: pay backlash ‘appropriate’ but no changes

As always, plenty of excuses from Wall Street and yes, they are kicking around ideas about reducing the bloated bonus plans, which is positive news. The downside is that when you look at the actions behind the words it’s obvious that not only has the bonus culture not changed for the better, it’s getting worse. Goldman and others on Wall Street still talk about paying big money to retain talent and the actual dollar amounts being set aside for bonuses is increasing. Wall Street doesn’t care what Obama’s “pay czar” has to say because he is irrelevant for the likes of Goldman. They’ve already won the lobbyist battle and will not be restricted in any way despite receiving billions both directly as well as indirectly through the bailout of AIG. The deeper pockets won and Congress folded as they always do.

In the speech Wednesday, Blankfein laid out compensation principles that he said should apply throughout the financial industry. They included: making the largest pay packages more performance-based, deferring compensation to reflect long-term performance, banning contracts that guarantee high bonuses, and making top managers keep most of their pay in stock until they retire.

New York-based Goldman first released the standards in May. They are similar to ideas under discussion at the Federal Reserve, which is developing new guidance for compensating financial executives.

But as it has returned to health, Goldman has set aside significantly more to pay its employees. Goldman’s costs for compensation and benefits rose to about $11.4 billion in the first half of 2009, up 33 percent from a year earlier. All of that wasn’t paid out; the company can use it for discretionary compensation at the end of the year.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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