Goldman Sachs share bonuses endorsed by US investors

The decision by Goldman Sachs to give its 30 top directors bonuses in shares rather than cash has been welcomed by US investors.

Scrutiny of the famously secretive investment bank has intensified since the beginning of the year and its profits against a volatile market and competitors caused many to believe the remuneration levels would indicate ‘business as usual’ as bailouts and losses humbled parts of the financial sector.

But the decision to pay rewards in company equity – as a run up to the shareholder vote on the bank’s executive pay at next year’s annual general meeting – has been cited as an important precedent for rivals by some.

Denise Nappier of the Connecticut Retirement Plans and Trust Funds (CRPTF), told Reposible-investor.com that the move by the bank is a “tremendous step that demonstrates its support of this important corporate governance reform”.

She added that the move could promote sustainability for both companies and the broader economy.

Rumuneration has become the central issue nearing the close of 2009. On Wednesday, UK Chancellor Alastair Darling announced an expected one-off 50% windfall tax on City bankers. The move provoked outcry in the market but has been endorsed by the French government, with no similar commitment from the US as yet. However, the Chancellor claimed this tax hit would exclude bonuses that were guaranteed.

It follows an unfolding drama last week at Royal Bank of Scotland in which the board of directors locked horns with the Treasury over the government’s control of the troubled lender’s bonus pools.

Today, Jean-Claude Trichet, European Central Bank president, warned today in a speech in London that the excesses of “self-serving” banks would provide fuel for the next financial crisis.