Goldman boss speaks up for bonus culture
LORD Griffiths, the vice-chairman of investment bank Goldman Sachs, has put his head over the parapet after claiming the public should tolerate bumper City bonuses for the good of the UK economy.
Griffiths, a former special adviser to Margaret Thatcher, said he was not “ashamed” of the generous reward policy at Goldman, which last week inflamed the bonus debate by revealing it is on track to hand out a record $22bn (£13.2bn) to staff at the end of the year.
Speaking at a debate on regulation and ethics in financial services at St Paul’s Cathedral on Tuesday, Griffiths said the public should “tolerate the inequality as a way to achieve greater prosperity for all”.
“I believe that we should be thinking about the medium term common good, not the short term common good,” he added. “We should not be ashamed of offering compensation in an internationally competitive market which ensures that businesses stay here and employ British people.”
Griffiths’ comments came after Credit Suisse on Tuesday said it would hike the base salaries of its executives to compensate for new regulatory limitations on bonuses.
Financial Services Authority chairman Adair Turner, who was also speaking at the debate, said the new G20 guidelines on compensation would make some difference but would not be “a magic panacea or silver bullet”.
“When you have irrational exuberance, even people who are paid in a deferred fashion with clawback believe their own propaganda,” Turner said.
All of the major UK banks and international investment banks have now signed up to a Treasury agreement to implement the G20 reforms, which include deferring bonuses over a longer period, paying a proportion of them in shares and subjecting them to clawback measures.