Bankers Rebuff Bonuses

Chief executive officers and other members of management at some of the world's big banks will forgo their usual mega-bonuses this year. Goldman Sachs CEO Lloyd Blankfein asked the compensation committee of the board to abstain from granting bonuses to seven top executives who will only be eligible for their $600,000 base salaries, a request that was approved.

A Goldman spokesperson told The Wall Street Journal that the company, which has been largely unscathed by the financial crisis, acted because it was "the right thing to do," as part of an industry in distress.

UBS soon followed Goldman's example, announcing that it would overhaul its executive pay programs; it had received help from the Swiss government after suffering billions in write-downs stemming from mortgages. Deutsche Bank's CEO had already announced that he would voluntarily forgo a year-end bonus.

By taking one for the team, the public may perceive that top bank executives feel their pain, but a lot of cynics say that they didn't have much choice, especially if their organizations benefit from a government bailout. The SEC has made it clear that it frowns upon excessive compensation pay that contributes to aggressive risk taking. John White, director of the SEC's division of corporation finance, stated last month at a meeting of compensation executives in New Orleans that all companies -- not just financial firms -- should consider limited executive compensation that rewards excessive risk taking.

More bank CEOs will likely follow in the footsteps of Goldman, UBS, and Deutsche. All eyes are on Citigroup after announcing this week that it would cut another 20,000 jobs, bringing job cuts to more than 50,000 by early next year. Citi's chief executive Vikram Pandit took the post last December; he and its board have been vehemently criticized by investors and industry watchers for failing to improve performance. News that he and other top executives will get a lump of coal in their Christmas stocking might bring the unemployed some solace.