Banks To Senate: Compensation To Go Off Cliff

Car falling of cliff

Allegedly! We’ll see if it really happens.

Wealth-Bulletin: Goldman Sachs, JP Morgan Chase and Bank of America all said at a US Senate hearing that compensation will fall severely this year, particularly for senior executives.

The Senate Committee on Banking, Housing and Urban Affairs held a hearing yesterday on oversight of the Emergency Economic Stabilisation Act and how financial institutions were using the funds they received from the US government.

Gregory Palm, general counsel at Goldman Sachs, said that since the year is not finished no compensation decisions have been made, but stressed that bonuses will be paid only out of the Goldman’s earnings for 2008, not its capital.

Goldman does not set aside an actual bonus pool during the course of any fiscal year but accrues compensation-related expenses for each fiscal quarter.

This year the amount accrued has been 48% of net revenues for each quarter—which includes cash compensation paid during the year, expense amortisation of prior years’ equity-based awards, payroll taxes, healthcare and other benefits, as well as retirement plan

Palm said: “Employee compensation will be dramatically affected by changes in the overall economic and financial environment and our performance for the full year. But it certainly will not increase as a result of receiving TARP funds.”


Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

home-us senate