Roughin’ it on Wall Street
Posted on Tuesday, November 18, 2008
WHO SAYS corporate executives
aren’t accountable to their
shareholders ? The leadership team at Goldman Sachs, one of the handful of outfits that used to be called investment banks, has decided to go without its annual bonuses. Instead of the usual, multi-million dollar packages, the executives at Goldman Sachs are going to tough it out on their $ 600, 000 annual salary. Rough life. After a year in which the entire industry went through the financial equivalent of a wood chipper, when Goldman’s share price dropped from just over $ 200 at the start of the year to Monday’s $ 62, the execs say they don’t deserve a bonus. Couldn’t agree more. This move by Goldman Sachs is a nice sign that executive bonuses are indeed tied to a company’s performance. Who knew ? Now, perhaps out of sheer shame or at least a shred of accountability, other highpaid corporate execs might be encouraged to go and do likewise. If this sort of thing would only spread, the days when a CEO could expect to profit handsomely from his company’s demise might finally come to an end. That’s the good news.
Here’s the bad news: Opting to go without a bonus came at the request of the executives themselves. Where was the board of directors at Goldman Sachs ? You know, the folks who are supposed to be looking out for shareholders and, among other duties, signing off on executive pay ? They only approved the request. They didn’t initiate it, according to press reports. This isn’t exactly directing things.
It would have been even better news if the board of supposed directors hadn’t just okayed an end to these undeserved bonuses but demanded it. Should a publicly traded company need to be shoved into limiting the millions it pays to executives for sub-par performance ? Not if shareholders still have a say on Wall Street.
Accountability, even for the most powerful corporate executives, shouldn’t be voluntary.
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