Goldman set for '81% bonus rise'

Goldman Sachs bankers

Despite political pressure on the bank to reduce the amount of money it has set aside for employee payouts, new reports suggest that Goldman Sachs bankers are likely to enjoy as much as an 81 percent rise in their pay and bonuses for 2009.

According to UK newspaper The Guardian, the US bank - which has proven to be one of Wall Street's strongest financial services institutions despite the economic crisis (the bank recorded record profits in the second quarter of 2009) - is now bracing itself for a severe public backlashing this week when it completes the US bank reporting season on Thursday.

Experts have suggested that Goldman Sachs is also likely to introduce a restructuring model to how they pay staff compensation. According to research group JMP Securities, for instance, Goldman is set to offer more to staff in shares, thereby avoiding bonus levels appearing on "compensation" reports by the banks.

G20 stipulation

That's because compensation reporting, which includes the costs of paying staff in salaries, benefits and pensions, is now covered in a new stipulation from the G20. This was introduced when the group included bankers' pay as a key priority following the fallout over the global economic crisis. According to the G20 ruling, banks should now defer bonuses over at least three years and instead pay a greater proportion of them in bank shares.

According JMP analysts, even though the proportion of pay and bonuses to revenues will fall at Goldman, "we still expect an 81 percent rise in compensation per employee in 2009 to $599,000 per head [...] although this remains 14 percent below peak 2007 compensation levels."

Reports show that the bank's executives have already tried to respond to public anger over pay by vowing to take their bonuses in shares rather than cash. What's more, while the bank has traditionally reserved 45 percent of its revenues to pay staff, analysts believe that despite the expected reductions for Goldman's bonus pool in the fourth quarter, Goldman still face a significant competitive advantage in hiring staff as average pay levels remain high.

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