Bonus day at Goldman Sachs is an intimate affair. Officially known as ‘Compensation Communication Day’, employees can expect to see their annual bonuses slashed by more than 20 percent. Should we feel sorry for them?
Goldman hasn’t had the best of years, but it is slowly working towards a recovery.
According to Reuters, the Bank’s fourth quarter profits fell 56 percent, mostly due to slipping trading and investment banking revenue.
Its shares however, did spike 8 percent to $105.29 on the New York Stock Exchange, as investors signalled their confidence in the bank’s cost cutting measures. Speaking to reporters, Goldman’s chief financial officer David Viniar said the bank was targeting almost $1.4 billion in annual cost savings.
However, there was a lot more interest in Goldman’s bonus payouts – or as the bank calls it, Compensation Communication Day.
Last year, the weak business climate and prospect of tighter financial regulation saw the banking industry cut more than 100,000 jobs globally and slash bonus pools.
For Goldman, its payroll declined by 2,400 employees during 2011, reflecting job cuts across trading, banking and back-office operations. In terms of compensation, the bank slashed payments by 21 percent to $12.2 billion. That works out to $367,057 per Goldman employee, compared with $430,700 per employee in 2010.
The New York Times described the Bank’s bonus day:
On Compensation Communication Day, the atmosphere inside Goldman’s office can be tense. Most employees are called one by one into a managing partner’s glass-walled office, where they are informed of their bonus numbers, as well as any stock awards or deferred cash payments they will get.
Meanwhile, John Carney at CNBC piqued:
Not everyone can keep their cool under such scrutiny. "One girl was actually crying, I think," a trader at Goldman said in a text message. "My number was so low I thought I was fired. My director had to convince me that the firm still wants me to stick around," said one person at Goldman.
Goldman Sachs isn’t the only one on Wall Street to announce weaker results and lower bonuses. The Wall Street Journal reports that Morgan Stanley, due to report their payouts today, plans to cap cash payouts at $125,000.
We wonder if there’ll be as much drama over at Morgan Stanley.