High Praise for Goldman Sachs Execs

In a recent blog, I chastized AIG management for not understanding the word "optics". The management team at the insurance giant seems to be incapable of understanding the world outside of their confines on Wall Street. They just don't get it.

Today, however, came word that the maanagement team at Goldman Sachs will not take their bonuses in 2008. This is a big deal! The decision effectively caps the salaries of the top team at Goldman at $600,000. While few people will cry for them, let's put in perspective that last year the CEO took home about $68 million.

Now, many would say that the execs don't deserve a bonus in the first place. That may be true. But, as we can see with AIG, there are many things that may not be deserved that people do not often understand. Bonuses have been awarded to countless executives whose companies have nearly tanked. Currently, Chrysler has on its books millions of dollars in promised "retainer bonuses" for its top team--given when DaimlerBenz divested itself of Chrysler to keep the top team in tact for a new owner. Why anyone wanted to retain this group of people who have mismanaged the company, I cannot figure out, but the bonuses are supposedly legally owed. This means that Chrysler could be in a position of asking the US for a hand-out with part of the money used to pay millions to its top executives. Outrageous! AIG is fighting the federal government on back taxes with--you guessed it--tax payer money. Perhaps it is time for the shareholders of AIG--US tax payers--to demand that all of the management team there be fired and the board be replaced. What else can one do when it seems impossible to change the behavior of a company?

So, with all of this going on, I think that we should all thank the top team at Goldman. They will now draw a line in the sand passed which few will want to cross. It will be interesting to see if anyone has the nerve to go in a different direction.