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Goldman boss urges end to bonus culture

LONG-TERM guaranteed bonuses should be banned and clawbacks introduced into contracts to prevent the excessive risk-taking of the past, Goldman Sachs chief executive Lloyd Blankfein said yesterday.<br /><br />Speaking at the Banks in Transition conference in Frankfurt, Blankfein said there was &ldquo;little justification of outsized discretionary compensation when a financial institution has lost money&rdquo;.<br /><br />He said bonuses should have a greater weighting towards stock payouts, while top earners should get most of their payouts in deferred stock. Only junior staff should receive their bonuses in cash, he said.<br /><br />The Goldman supremo&rsquo;s criticism of remuneration practices will raise eyebrows given that the bank put aside a record $11.4bn (&pound;6.9bn) pay pot in the first half of 2009. He also attacked some investment banking products as being of no use to society. &ldquo;The industry let the growth and complexity in new instruments outstrip their economic and social utility as well as the operational capacity to manage them,&rdquo; said Blankfein.<br /><br />Blankfein, whose bank recorded record second-quarter profit on the back of stellar performances in trading and underwriting, added that banks were &ldquo;healing&rdquo; and that the &ldquo;worst of this crisis is off the table&rdquo;.<br /><br />On the collapse of Lehman Brothers, he said that while the bank&rsquo;s demise was extremely regrettable, saving it could have led to a public backlash that might have prevented the government from rescuing the next, potentially much larger, bank to face problems.