COMP NEWS – Goldman Sachs is tightening its belt in preparation for a potential economic downturn, with its spending on compensation down over 20% even as its workforce grows.
It’s unlikely to be a vintage year for bonuses at Goldman Sachs. The firm released its third quarter results today, and there’s little sign of the sort of third quarter bonus bump that might indicate an unusually generous compensation pot.
Goldman’s spending on compensation (salaries, plus accrued bonuses) rose 14% year-on-year in the third quarter, which would look generous were it not for the fact that headcount was also up by 14% during the year. And for the year so far, spending on compensation is down by 21%, even though Goldman has 6,100 more people than before.
As a result, the average Goldman employee has accrued compensation of ‘just’ $232k so far for 2022, down from $337k in 2021, a fall of 31%.
Many employees at Goldman Sachs receive the majority of their compensation through bonuses and other non-salaried compensation.
Investment banking revenues have collapsed. Revenues from Goldman’s combined M&A, ECM and DCM activities fell 57% year-on-year in the third quarter; they’re down 45% year-to-date.
On the other hand, though, Goldman’s fixed income salespeople and traders are having a great year, with FICC revenues up 36% year to date, compared to 21% at Morgan Stanley and just 10% at JPMorgan. Within fixed income, Goldman said the best performers were rates and currencies desks, where revenues were “significantly higher”, followed by commodities and credit products, where revenues were merely “higher.” In mortgage trading, though, revenues were “significantly lower.”
Fixed income traders might be paid enough to keep them happy, but Goldman won’t want to be too splashy. In the first nine months, costs across the firm consumed 63% of revenues, up from 53% last year. Even while compensation spending was crimped, technology spending rose 16% and spending on professional services (eg. management consultants to help shape strategy) rose 22%.
To read more about Goldman Sachs’ compensation and bonuses, click here.
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