Majority of US firms cutting bonuses

October 20, 2009 12:29:12 PM

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A majority of financial executives in the United States say they are reducing bonuses, which have become a hot-button issue amid the economic crisis, according to a poll published Monday.

Some 55 percent of senior executives surveyed by financial consultants Grant Thornton claimed to be cutting back on bonuses, although seven percent admitted they were in fact increasing them.

Fewer respondents, 42 percent, said they were lowering salaries and nine percent were still raising them.

Thirty-four percent said they were reducing equity-based compensation such as stock options, against six percent who said they were allowing more money into the schemes.

A major bugbear with taxpayers since last year's financial meltdown, hefty bonuses are considered by many to have contributed to the excessive risk-taking that aggravated the worst economic downturn since the 1930s.

Grant Thornton surveyed 846 Chief Financial Officers (CFOs) and senior comptrollers at firms across the United States between September 21 and October 2.

White House chief of staff Rahm Emanuel said Sunday that he understood the public's anger at large bonuses, and said the banks had a key role to play in restoring confidence in the financial system.

"They have a responsibility to the whole system. And it starts with not fighting the financial regulatory system and the reforms that are necessary to protect consumers, homeowners, and others," he told CNN.

"They have a responsibility to be part of the solution, not part of being the obstacle" and the forces Obama is fighting, he added.