Executive-pay overhaul gets backing from Goldman Sachs CEO

Lloyd Blankfein calls for a 'renewal of common sense.' Some analysts think he may be seeking to blunt an even tougher assault by Congress.

By Walter Hamilton and Tiffany Hsu
LA Times

April 8, 2009

Reporting from Los Angeles and New York — The campaign to clamp down on executive pay is getting an assist from an unusual source: the head of Wall Street's most powerful investment bank.

Lloyd Blankfein, chief executive of Goldman Sachs Group Inc., said Tuesday that the financial industry needed a "renewal of common sense" and pay standards to "discourage selfish behavior, including excessive risk-taking."

Blankfein said most compensation should be in stock rather than cash, employees should be required to hold their shares for longer periods and firms should "claw back" previously paid bonuses if employee risk-taking leads to losses.

The proposals would represent a notable shift in Wall Street compensation practices, primarily by binding employee pay to the longer-term financial health of companies.

(More here.)