COMP NEWS – As most of the U.S. financial sector considers tightening its belt in the face of an uncertain economic future, Goldman Sachs is opening their purses – but only for select high-performers.

NEW YORK, Nov 14 (Reuters) – Goldman Sachs (GS.N) bosses are considering fatter bonuses to retain star traders and dealmakers this year as the bank looks to win over some who were disappointed by smaller payments in 2022, according to five sources with knowledge of the situation.

The bank has been through a dismal year with earnings down 34% in the first nine months of 2023, pressured by tepid dealmaking and writedowns for a consumer business that lost $3 billion in three years. Goldman’s weaker year-to-date profit suggests payouts should be flat or lower, said Stephen Biggar, an analyst at Argus Research.

Despite that, Goldman executives are discussing sweeteners for standouts from the trading and investment banking division, which accounts for about 68% of its revenue, three of the sources said. The pay bumps could help win over some employees who balked at smaller bonuses last year that they blamed on losses from the retail operations.

The firm’s allocation for bonuses fell by as much as 40% in 2022, according to another source, after earnings slid 48%. That drop exceeded Wall Street’s average bonus decline of 26%.

The firm laid off thousands of people in several rounds of layoffs over the course of 2023.

The firm laid off more than 3,000 employees in January in its biggest round of job cuts since the 2008 financial crisis. It followed with more headcount reductions months later.

Yet higher compensation is being floated to keep star employees from being lured away by more lucrative opportunities in private equity or hedge funds, one of the sources said.

Several prominent Goldman partners have departed in recent months for other financial firms, including Julian Salisbury, who is joining investment firm Sixth Street, and Dina Powell McCormick, the former head of the bank’s sovereign business who left for merchant bank BDT & MSD Partners.

“They’ve had to be more competitive with buy side and the alternative shops, which argues for higher pay for a given level of performance,” said Biggar.

The bank is also tweaking rewards for asset managers whose long-term payouts will be increased when funds outperform, according to a source who confirmed an earlier Bloomberg report.

To read more about how employers are planning to temper compensation increases in 2024, click here.

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