Goldman Sachs Bonus System Corrupted in 2005, Ex- Employee Greg Smith Book Says

Goldman Sachs Group Inc. (GS) changed how it calculated year-end bonuses in 2005, corrupting a culture of teamwork that existed previously, according to a book published today by former employee Greg Smith.

Before 2005, the company determined workers’ annual awards“not just on how much business you’d brought in, but also on how good you were for the organization,” Smith, a former vice president, writes in “Why I Left Goldman Sachs: A Wall Street Story.”

“From 2005 until the present day, the system has become largely mathematical: you were paid a percentage of the amount of revenue next to your name,” a figure that could vary from 5 percent to 7 percent, wrote Smith, 33, without saying how he learned about such a change. “The problem with the new system was that people would now do anything they could — anything –to pump up the number next to their name.”

Read on.

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