Goldman Sachs Nine-Month Compensation Totals $527,192 a Person
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By Christine Harper
Oct. 15 (Bloomberg) -- Goldman Sachs Group Inc. set aside $16.7 billion for compensation and benefits in the first nine months of 2009, up 46 percent from a year earlier and enough to pay each worker $527,192 for the period.
Revenue jumped 49 percent to $35.6 billion this year through September and the New York-based firm set aside 47 percent to cover its largest expense, compensation and benefits, Goldman Sachs said today as it released third-quarter earnings results. The amount set aside this year is just shy of the all- time high $16.9 billion allocated in the first three quarters of 2007.
Chief Executive Officer Lloyd Blankfein, who set a Wall Street pay record in 2007, slashed compensation last year and went without a bonus after the firm reported its first quarterly loss and accepted financial support from the government. As earnings rebounded and the firm repaid $10 billion plus dividends to the government this year, the company resumed allocating billions of dollars for year-end bonuses.
“Goldman is sort of the maverick of financial services right now and they’re taking the lead as far as, ‘We believe in our people, we’ve done well, we’re going to stay the way we’ve always been and not change,’” said Jeanne Branthover, managing director at Boyden Global Executive Search Ltd., a recruiting firm in New York.
David Viniar, Goldman Sachs’s chief financial officer, said the firm is “very focused” on making sure compensation levels are appropriate.
“It will not surprise you that we’re giving it a lot of thought,” he told reporters on a conference call this morning. “Our competitors are paying people quite well” and are “very willing to pay employees guaranteed bonuses of very high amounts.”
JPMorgan Chase & Co., the second-biggest U.S. bank by assets, reported yesterday that its investment bank allocated $8.79 billion for compensation in the first nine months of the year, equal to 38 percent of the unit’s revenue. That ratio was down from 52 percent in the same period a year earlier.
While Goldman Sachs typically sets aside about half of revenue for compensation in the first three quarters, the company often slashes the ratio in the last quarter. In the fourth quarter of 2007 the firm allocated 30.5 percent of revenue to pay employees and in the fourth quarter of 2006 the ratio was 26.6 percent. Last year, when the company posted a fourth-quarter loss it reported a negative $490 million compensation expense for the period.
Goldman Sachs, which last quarter began reporting staff numbers that include consultants and temporary staff instead of just full-time employees, had 31,700 workers at the end of September. The company today revised the number of employees it had at the end of June to 31,200 from the 29,400 it reported in July.
In the first nine months of fiscal 2008, Goldman Sachs set aside $11.42 billion, or an average of $350,763 per employee.
Blankfein, who was awarded a record-setting $68.5 million in salary and bonus for 2007, said in an April speech that the industry’s compensation decisions before the crisis “look greedy and self-serving in hindsight.”
The company published a three-page set of compensation principles in May that include paying a higher percentage of an employee’s bonus in stock as the pay level increases and deferring the payout of the stock over a period of years. The company also said it doesn’t believe in granting employees guaranteed bonuses for more than a single year.
To contact the reporter on this story: Christine Harper in New York at email@example.com.
Last Updated: October 15, 2009 10:28 EDT