Financial services provider Wachovia Corp.'s (WB) Chief Executive Officer Robert Steel will reportedly forgo his bonus for 2008, thus joining the growing list of financial leaders going without bonuses for the current year.
Reports on Tuesday indicated that Steel, who took over as CEO of the beleaguered bank in July 2008, declined an annual bonus. Steel is overseeing the sale of the company to Wells Fargo & Co. (WFC), which agreed in October to buy Wachovia for $15.1 billion in stock.
Steel was named Wachovia's CEO, President and member of the Board of Directors in July 2008 following the ouster of the former CEO Kennedy Thompson. Prior to joining Wachovia, Steel served as Under Secretary for Domestic Finance with the U.S. Department of Treasury, a role he assumed in October 2006. Earlier, Steel retired from Goldman Sachs Group Inc. (GS) as a vice chairman in February 2004, after a long and distinguished career there, which began in 1976.
The decision of giving or denying executive bonuses assumes great importance in the current economic and financial scenario, as many Wall Street firms have taken the decision to curtail their expenditure on executive compensation amid a slew of job cuts. Wall Street firms, with their fat paychecks, are being seen as the trigger mechanism that fueled the credit crisis that eventually dragged the economy into recession. As Wall Street firms line up for Government assistance in the unstable economic environment, the hefty bonus, if paid, would look incongruous.
New York Attorney General Andrew Cuomo has demanded that nine banks that received $125 billion of taxpayer money furnish details about their bonus plans. The nine banks include Bank of America Corp. (BAC) and Wells Fargo.
Merrill Lynch & Co. Inc. (MER) issued a statement late Monday saying its compensation committee had accepted a request from the company's chairman and CEO John Thain as well as four other executive officers to not receive bonuses for the year. The move comes amid earlier reports that Thain was pushing for a bonus of up to $10 million, a report that drew fire from New York State Attorney General Andrew Cuomo. In a letter to Merrill's board of directors, Cuomo called a $10 million bonus "unjustified" in light of the financial crisis and the company's performance this year.
The Wall Street Journal said Monday that investment bank Morgan Stanley's (MS) CEO John Mack has also decided to forgo a bonus for 2008. Mack had given up his bonus for 2007 after the company suffered a loss last year. This year also, Mack decided on the same lines after the company's stock got battered amid the financial meltdown and the job cuts at the company, as well as due to the $10 billion capital infusion received from the federal government.
In November, Goldman Sachs said that its top executives will not receive bonuses for 2008. According to a company spokesman, the seven executives, including CEO Lloyd Blankfein made the decision to forego cash or stock bonuses themselves. Goldman Sachs and Morgan Stanley became bank holding companies in September and are subject to regulation by the Federal Reserve. The company had earlier laid off 3,200 employees, representing about 10% of its worldwide workforce.
Robert Steel has reportedly decided against remaining with Wachovia after it merges with Wells Fargo and will not collect any severance. However, ten other executives at the company are eligible to collect severance payments if the company completes its merger with Wells Fargo.
In November, Wachovia said in a regulatory filing that some of its directors and executive officers might receive additional benefits from the merger with Wells Fargo, including severance payments of up to $98.1 million and stock-based incentives that could total $2.5 million.
Wachovia reported a huge loss for the third quarter in October, driven primarily by hefty impairment charges of $18.8 billion. Adding to the woes were increasing credit costs, market disruption losses, lower overall asset valuations and subdued market activity. The Charlotte, North Carolina-based Wachovia posted a net loss for the quarter of $23.70 billion, compared to profit of $1.71 billion in the prior-year quarter.
WB closed Tuesday's regular trading session at $5.96, down $0.42 or 6.58% on a volume of 36.21 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.