http://www.bloomberg.com/apps/news?pid=20601109&sid=aw6thy2rdrD0&refer=home

Goldman Pay Rises to $622,000 on Average Per Employee (Update2)

By Adrian Cox

Dec. 12 (Bloomberg) -- Goldman Sachs Group Inc. is paying its employees an average of $622,000 this year, after posting the highest profit ever for a securities firm.

The firm set aside $16.5 billion for salaries, bonuses and benefits for its 26,467 employees in the fiscal year ending in November, 40 percent more than it paid out all of last year, according to Goldman's earnings report today. The firm allocated 43.7 percent of its revenue for pay, down from 46.6 percent.

Investment banks benefited this year from rising stock and commodities markets and record share sales and takeovers. Goldman said today full-year profit jumped 70 percent to $9.54 billion, more than the top five firms earned in both 2001 and 2002. Average pay is skewed by the highest earners.

``Everyone who has that big smile when they get their check will also realize that it may not be nearly the same amount next year,'' said Henry Higdon, who runs New York-based executive recruitment company Higdon Partners LLC. A handful of star bankers and traders will get bonuses worth more than $30 million this year, he said. ``The stars don't align very often.''

Goldman reported gains of more than 50 percent each in investment banking and fixed-income and equities trading. The biggest raises may go to bankers who arrange share sales after revenue for their division almost doubled.

The decline in the compensation-to-revenue ratio was ``a direct result of our financial performance this year, not necessarily a permanent shift to a lower comp ratio,'' Chief Financial Officer David Viniar said on a conference call with journalists today. The greatest growth in hiring this year was in Asia, followed by Europe and the U.S., he said.

Bonuses May Peak

Goldman's pay per employee in 2005 was the highest of the major New York-based securities firms. The company is the first to report fourth-quarter earnings this year. Lehman Brothers Holdings Inc. and Bear Stearns Cos. report Dec. 14 and Morgan Stanley, the No. 2 firm by market value, reports Dec. 19. Merrill, the No. 3 firm, posts its full-year results next month.

Bonuses may peak this year as record profit and a backlog of transactions give way to slower earnings growth, according to an annual survey of European compensation released last month by London recruitment firm Armstrong International. Analysts surveyed by Bloomberg forecast that earnings will be little changed after three record years.

Pay will rise as much as 30 percent this year for mergers advisers, private bankers and derivatives and commodities traders, Armstrong found. Bonuses for debt underwriters will climb less than 10 percent. Underperformers may get no raise as banks focus on rewarding stars in case markets go sour.

In the U.S., Wall Street employees last year earned $289,664 on average, or 5.1 times as much as other workers in New York City, New York State Comptroller Alan Hevesi said in October. Financial employees generated $2.1 billion in 2005 tax revenue and each new position filled in the industry creates two additional jobs in the city and one in the suburbs.

Goldman shares dropped $2.52, or 1.2 percent, to $200 at 4:20 p.m. in New York Stock Exchange composite trading. The stock has climbed 57 percent this year, the most among U.S. securities firms and the largest annual advance since Goldman went public in 1999.

Merry Christmas indeed.

Meh - that's finance. Big money all around, but the hours to go with it.

Brilliant work by the PR folks at GS. Every story I've seen on this prominently includes the 622,000 average line. They really give the impression that this will be spread somewhat evenly across the company when it certainly won't.

Brilliant work by the PR folks at GS. Every story I've seen on this prominently includes the 622,000 average line. They really give the impression that this will be spread somewhat evenly across the company when it certainly won't.

One of my good friends started out with Goldman right out of school. He opened at around $70K, and his first bonus was another $70K. I'm not sure what his salary was for the next year, but it was a substantial bump, and his bonus will double it again.

The runts at the company aren't complaining. They'll be making their multi-millions very soon.

I just think it was a great job to diffuse what could have been a story on excessive compensation to guys that are already well-off. The headline could have been,

"Multi-million Bonuses for Top Stock Brokers"

I hope the PR staff gets good bonuses.

I just think it was a great job to diffuse what could have been a story on excessive compensation to guys that are already well-off. The headline could have been,

"Multi-million Bonuses for Top Stock Brokers"

I hope the PR staff gets good bonuses.

Why is it excessive? Goldman's a publicly held company that generates large profits. The people responsible for it should damn well benefit from it.

Crap: I'm not going to get in a debate on the compensation itself. I'm just pointing out that the PR folks at Goldman did a great job of controlling the message. You know damn well that the stories about these kinds of bonuses normally cast them in a negative light.

Crap: I'm not going to get in a debate on the compensation itself. I'm just pointing out that the PR folks at Goldman did a great job of controlling the message. You know damn well that the stories about these kinds of bonuses normally cast them in a negative light.

You're making the wrong argument though. While I'll disagree, feel free to make this case for oil companies, health care, etc. This is a completely different situation where no spin is necessary. It might actually help to highlight the $30 million bonuses that are given to the managers, as that would certainly grab the eye of a newly-wealthy person with millions to invest, who might not care that the average Goldman employee is now earning $600K.

Successful managers and other high level people who had an impact in a better than average year should be rewarded. In below average years where they are claiming they have to cut thousands of people working for 50K, but give a 500 million bonus to the executive who oversaw the downturn doing nothing, thats what gets me angry.

Successful managers and other high level people who had an impact in a better than average year should be rewarded. In below average years where they are claiming they have to cut thousands of people working for 50K, but give a 500 million bonus to the executive who oversaw the downturn doing nothing, thats what gets me angry.

Again, while your point is valid, this is a debate for a different thread. When an investment bank like Goldman lets go of people, its because they are directly responsible for losing millions of dollars, they lost a major client relationship, or fraud. It's not an effort to offset losses.

Again, while your point is valid, this is a debate for a different thread. When an investment bank like Goldman lets go of people, its because they are directly responsible for losing millions of dollars, they lost a major client relationship, or fraud. It's not an effort to offset losses.

It can be debated in this thread, which I think can be part of the article. Investment bankers are very bright (you pretty much need an Ivy League or "premier" school degree, in both the undergraduate and the MBA program, to get a job with a Wall Street or top-level firm) and I've heard the interview process for these jobs are very tough. They make a ton of money if they are good, but they also have no time outside the job (which is fine if they are happy with what they do). One thing to note is these positions are very heavy on the bonus. And living in places like NYC, London, Hong Kong, Tokyo, you need a much bigger salary to live at least a comfortable life.

How much does the janitor make?

How much does the janitor make?

I don't know. Why?

I don't know. Why?

I'd clean toilets for that kinda $$$$:D

I'd clean toilets for that kinda $$$$:D

Your not alone.

I've always been curious, how are these investment firms structure and how are compensation packages drawn up?

I worked for a GS subsidiary for a while. Trust me they could have paid me triple and I still would not want to go back... The only people that work there hate their lives.

I worked for a GS subsidiary for a while. Trust me they could have paid me triple and I still would not want to go back... The only people that work there hate their lives.

Not true...the only people that work there are those who want nothing more out of their lives but money and power.

Not true...the only people that work there are those who want nothing more out of their lives but money and power.

So your saying they are shallow?

Is shallowing even a word?

Is shallowing even a word?

I don't know what the hell was I thinking with that typo. Fixed it.

Haha don't worry about it. But to answer your question, yeah I think a majority of them are shallow.

Haha don't worry about it. But to answer your question, yeah I think a majority of them are shallow.

That's absurd. I know a bunch of people who work in finance, and if anything, they're generally smarter than most crowds - they have to be high achievers to get where they did in the first place (every go through a GS or McKinsey Interview?).

I don't think Shallow is the appropriate word. The people in those positions are extremely motivated. What motivates them varies... be it money, power, success in general. That may mean that they are motivated by other things than some of us are, or that their priorities are different, but I don't think Shallow is the right word.

The highly compensated folks at a place like GS do very demanding work, put in very long hours, and essentially earn their money. Certainly other people in other lines of work work just as hard as these folks, but these people are entitled to enjoy the profits they help generate.

Also, it should be noted that a lot of the high powered civil servant jobs in the treasury department/Federal Reserve are held by folks who made their fortune at Goldman Sachs, and then moved on to the rest of their lives.

I've always been curious, how are these investment firms structure and how are compensation packages drawn up?


Usually they are heavily bonus driven, and very top heavy as well. It would be interesting to see a median salary as well.

Also, interesting that the compensation in the article also includes benefits, which most people don't factor when stating their own compensation.

I do wonder how shewd the average is? I believe Morgan Stanley followed up with similar bonuses.

That's absurd. I know a bunch of people who work in finance, and if anything, they're generally smarter than most crowds - they have to be high achievers to get where they did in the first place (every go through a GS or McKinsey Interview?).

Glengoyne already followed-up with a better description of a lot of people at the big firms like Goldman. So yes, shallow isn't the right word, as being shallow has nothing to do with intelligence, and I don't know why you even made that connection.

People have the perception that these firms recruit exclusively from the big MBA programs. But the type of candidate that they love getting from the undergrad ranks tells you a lot about what's needed for success: they love athletes. Maybe not the starting QB, but wrestlers, lacrosse players, etc. These are people who have proven that they are willing to put in long hours to strengthen their skills, be a team player, and strive to be great at what they do. A lot of what makes a great financial mind isn't necessarily book smarts, and these firms recognize that.

As I said earlier in the thread, the people who are making millions deserve every cent. They make that money because they make the company even more money. It's impossible to coast along and survive a place like that. And if you mess up, you're finished.

And just following-up on something else Glengoyne said...there are a ton of former Goldman minds scattered throughout big positions after they "retire" at 40. I'm in a branch of the Treasury Dept, and while I haven't had the opportunity to meet any of these guys, just from reading over press releases you can see that all of these guys made tens of millions from their prior careers. Hey even here in NJ, the guy who is currently in charge of running our state further into the ground, Jon Corzine, made his fortune at Goldman.

People have the perception that these firms recruit exclusively from the big MBA programs. But the type of candidate that they love getting from the undergrad ranks tells you a lot about what's needed for success: they love athletes. Maybe not the starting QB, but wrestlers, lacrosse players, etc. These are people who have proven that they are willing to put in long hours to strengthen their skills, be a team player, and strive to be great at what they do. A lot of what makes a great financial mind isn't necessarily book smarts, and these firms recognize that.



Not a bad thing.

Of course not. And that's why they succeed in that industry and make tons of money.

Guess I was confused by your first post and the following posts?