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A change of heart, or maybe ears
I don’t ever recall quoting The Judds before, but there’s a first time for everything: “I’ve had a change of heart. I see what I put you through. And I’ll make it up to you.” Could it be that certain executives in high places are feeling guilty and want to make amends?
Let’s not take this too far, but just play along for a minute. Today, Goldman Sachs announced changes to its year-end bonus plan. Instead of cash, the bank’s top 30 executives will get bonuses in the form of stock that’ll be tied up for five years, with a clawback provision in place. From Bloomberg:
The award will be comprised of so-called shares-at-risk, allowing the firm to take them back if it determines that the executive failed to adequately analyze or raise concern about risks, the New York-based company said in a statement today. The firm also will give shareholders a non-binding vote on compensation.
Goldman didn’t have to do this. After all, the bank brazenly said it would’ve survived the financial collapse without government aid (a notion Treasury Secretary Geithner rejected). So is Goldman simply placating the masses, the government and its shareholders with this move? Or perhaps behind closed doors, it has learned something, despite the bold statements about doing “God’s work” and such.
Goldman’s ears clearly aren’t clogged. It has responded directly to the public outrage against it. And the latest Bloomberg survey shows the people’s disdain hasn’t waned:
Two-thirds of Americans say they have an unfavorable view of financial executives. More than half say big financial companies are only out to enrich themselves and also say they shouldn’t have received government aid. And most Americans don’t want to see bankers collecting fat checks at the end of the year if their companies were bailed out by taxpayers.
“The fact that they’re even in existence should be bonus enough,” says Cassie Swihart, a 58-year-old retired registered nurse from Warsaw, Indiana…
“Why would you want to give somebody a bonus who put us into this situation?” said respondent Elijah Brown, 42, an unemployed union contractor from California.
Ah, but before we assign too much credit to public opinion, it’s worth noting that Goldman’s announcement comes a day after Britain slapped a one-time 50% tax on banker bonuses. I sense a dose of preventive medicine — look at what we’re doing on our own! There’s no need for a silly old bonus tax.
Still, I don’t entirely discount the possibility that some executives have taken a long, hard look at themselves and their business models. GE CEO Jeffrey Immelt said this in a speech yesterday:
“We are at the end of a difficult generation of business leadership, and maybe leadership in general. Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits…”
“Rewards became perverted. The richest people made the most mistakes with the least accountability,” Immelt said. “In too many situations, leaders divided us instead of bringing us together.”
For his part, Immelt says he felt he needed to be a better listener coming out of the financial crisis.
Maybe he’s not the only one.