Tags: Goldman | Sachs | Bonus | Decision

Source: Goldman Delays Bonus Decision

Tuesday, 19 Jan 2010 10:33 AM

Investment bank Goldman Sachs is likely to unveil the details of multi-million pound bonuses to staff next week, a person familiar with the matter said on Tuesday, after a delay as a row heats up over payouts.

Goldman, the focus of much of the public outrage over excessive bonuses, had been expected to give staff the outline of their payouts on Monday, in line with previous years when bankers are told a couple of days before full-year results.

Staff were not told in advance this year, however, but will hear next week, the source said. The bank is due to announce results on Thursday.

As banks head into one of the most controversial bonus seasons of recent years, they face mounting regulatory and political hurdles — not least the introduction of a controversial 50 percent tax on bonuses in Britain and moves by France, the United States and other countries to prevent banks making hefty payouts so soon after being bailed out by taxpayers.

Goldman has also shifted to a calendar year for the first time.

The Daily Telegraph reported that the Financial Services Authority, Britain's financial regulator, had taken issue with Goldman's bonus plans, effectively blocking them.

The FSA and Goldman declined to comment.

The regulator has in the past blocked awards due to issues with the structure of compensation, but not the level of pay.

In addition to a 50 percent British tax on bonuses, the regulator has imposed tough pay rules across the sector.

Goldman has sparked outrage among critics for preparing to pay more than $20 billion in compensation this year, only months after benefiting from a $10 billion U.S. taxpayer bailout.

Some insiders have blamed the Wall Street powerhouse for not taking a more restrained approach and for stoking public anger. Chief Executive Lloyd Blankfein ruffled feathers last month when he said his and other banks were doing "God's work.

Top investment banks appear to have been stung by the latest backlash but it is unclear whether they will rein in pay plans.

J.P. Morgan on Friday said it would pay a record $9.3 billion to its staff, working out at about $379,000 per banker, up more than $100,000 from 2008.

It did not say how much it will pay the British Treasury under the new bonus tax, though conservative estimates indicate its levy alone will be at least 300 million pounds.

Britain had expected to raise 550 million pounds from the tax, but banks look likely to swallow the cost of the tax or spread it across their global workforces, leaving the industry with a potential tax bill of over 4 billion pounds.

Goldman's bonus delay and increased attention over payouts come as the sector heads into reporting season and as politicians vow to stop bankers earning millions just months after being rescued.

The United States last week proposed Wall Street pay $90 billion over 10 years to reimburse taxpayers for the financial bailout, as President Barack Obama slammed bankers for their "obscene bonuses.

Banks across the industry have changed their compensation plans to pay more in shares over several years, rather than an immediate cash sum, although the reform sparked by the financial crisis has done little to bring down overall pay figures.

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Investment bank Goldman Sachs is likely to unveil the details of multi-million pound bonuses to staff next week, a person familiar with the matter said on Tuesday, after a delay as a row heats up over payouts. Goldman, the focus of much of the public outrage over excessive...
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Tuesday, 19 Jan 2010 10:33 AM
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