As Cohan points out in the Yahoo Finance video, using 42% of revenue for compensation is outrageous. The amount of compensation itself is remarkably flagrant and conspicuously offensive.
When a bank's profits decline by 58%, executive compensation should reflect that fact and also should decline by the same percentage. Bonuses should really count for something other than a means of retention. Bonuses at Goldman serve to promote risk taking when they do not reflect an extraordinary work ethic.
Goldman Sachs--same old, same old!
It's Goldman Bonus Day
By Kevin Roose and Susanne Craig - DealBook
Groans and grimaces inside a 200 West Street skyscraper can mean only one thing – yes, it’s Goldman Sachs bonus day.
Thursday is “Compensation Communication Day,” the name Goldman gives to the day when its employees learn how big – or how small – their annual bonuses will be.
Many Goldman employees are dreading this year’s big reveal, and for good reason. The firm announced on Wednesday that its revenue in 2011 was down significantly, likely bringing bonuses down with it.
It was a bad year overall for Wall Street banks, with the largest bulge-bracket firms taking big hits to their bottom lines and cutting costs wherever possible. Goldman has not taken the drastic step of capping cash bonuses at $125,000, as Morgan Stanley has told its employees it intends to do this year. But many of the firm’s employees are privately keeping their hopes low.
One Goldman employee, who spoke on the condition of anonymity because he is not authorized to talk to the media, said he was telling himself to expect no bonus at all, so that anything above zero would come as a pleasant surprise.
Once the news is broken, employees return to their desks, where some celebrate, others sulk and still others trade gossip via the firm’s internal instant-messaging system. On Thursday morning, fearful word spread around Goldman’s New York office about colleagues in Europe who had already received their bonuses, reportedly at levels much lower than last year’s, according to one person with knowledge of the conversations.
Even the largest bonuses at Goldman this year are likely to be a far cry from those given out during Wall Street’s prelapsarian years. As Charles D. Ellis recounts in “The Partnership: The Making of Goldman Sachs,” his book on the firm, employees at the firm were once paid their yearly bonuses in stacks of $100,000 checks. ($100,000 being the biggest single-check amount the firm’s payroll system could process.)
In 2006, the last full pre-crisis year, Lloyd C. Blankfein, the firm’s chief executive, took home a $68 million bonus.
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