Marveling at the bonuses of investment bank chiefs is an annual rite for the media, and this decade produced some vintage years on the historical compensation scale. This year, the credit crisis has produced a new plot line: the compensation that top bankers won’t be receiving.

Goldman Sachs (NYSE:GS), the bank that traditionally tops compensation tables, announced that seven of its top executives, including CEO Lloyd Blankfein, will forgo bonuses this year. Today, UBS (NYSE:UBS) followed suit. Expect senior executives at rivals Merrill Lynch (being acquired by Bank of America (NYSE:BAC)), Morgan Stanley (NYSE:MS), and Citigroup (NYSE:C) to do the same.

Barring UBS (which gets its own Swiss package), all of these institutions have received between $10 billion and $25 billion as part of the U.S. Treasury’s $700 billion bailout program. Furthermore, Goldman has put up some of the best numbers in the group; the bank earned almost $4.5 billion through the first three quarters of its fiscal year.

The right decision is good business
When taxpayers are ponying up funds to prop up the financial system, it is right and proper that senior executives should voluntarily pass up bonuses. It’s also the smart thing to do at a time when bankers are under politicians’ microscopes.

For shareholders, however, this does not solve the problem of compensating bankers in a way that aligns the interests of both parties (a deep-seated problem that contributed to the crisis). In theory, increasing the proportion of compensation paid out in restricted shares should be effective. That wasn’t enough to save Bear Stearns or Lehman Brothers (OTC: LEHMQ.PK) -- two banks where employee ownership was around 30%, a level that puts much of corporate America to shame.

Want more? Here’s Another Insane Wall Street Pay Story involving a former Goldman Sachs executive.

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Alex Dumortier, CFA, has no beneficial interest in any of the companies mentioned in this article. Bank of America is a Motley Fool Income Investor pick. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.