Pay rise at Goldman

Goldman Sachs

As soon as the pay rise row dies down, someone seems to ignite it all over again. This time it's Goldman Sachs, by giving an astonishing 46 percent pay rise to its staff.

Workers at the investment giant have racked up an average $527,192 in salary and bonuses so far this year after the firm made an impressive $3.1 billion profit in the third quarter.

Average pay for staff at the group is now 46 percent higher compared to last year, according to reports in UK newspaper The Times. The news is likely further to anger taxpayers who blame excessive risk-taking by banks for the global recession.

Over the first nine months of its financial year, Goldman Sachs has set aside $16.7 billion to compensate its 31,700-strong global workforce. The bank needs to top $21 billion to match the bumper bonus year of 2007.

In the most recent quarter, covering the three months to 25 September, Goldman Sachs reported $5.3 billion for salary and bonuses, which is a rise of 84 percent in the third quarter last year.

The sharp rise in pay comes as global governments pledge to stamp out risk-taking by banks. Yesterday, for instance, Goldman Sachs was one of a number of the world's biggest banks to sign up to new rules on bonuses agreed at the G20 summit in Pittsburgh last month.

All of the major UK banks have also pledged to support the new rules, which will allow bonuses to be clawed back as well as the deferral of compensation for senior executives working in more risky areas over three years, with at least 50 percent of the payment in shares or share-linked instruments.

David Viniar, chief financial officer of Goldman Sachs, said that the bank was considering whether to raise the proportion of its compensation paid in equity, as other banks are doing in response to pressure to tie bonuses to banks' performances.

"We've always paid a lot of our bonuses in stock, deferred and divesting over time, but we're looking at those programs and a decision will be made at the end of the year," he said.

Viniar insisted that Goldman Sachs, which has come under fire for its generous compensation just months after paying back a $10 billion taxpayer loan, was aware of the difficulties that ordinary consumers faced in the tough economic environment.

"We're very focused on what's going on in the world, what's going on in the economic environment," he stressed. "But we're also focused on our franchise and being fair to our people, who we think have performed admirably through the entire crisis. That's something we're weighing up."

Profits for the third quarter rose from $845 million last year. Although earnings were not as high as the $3.4 billion made in the record last quarter, they were ahead of expectations. Net revenues, meanwhile, excluding net interest income, was 105 percent higher than last year at $12.3 billion. Revenue fell in investment banking by 31 percent year-on-year to $889 million as clients held off on making acquisitions. Revenue from trading and principal investments, which includes trading done with the bank's own money, rose more than 260 percent to US$8.8 billion as fixed income and equities performed strongly.

Like this article? Get the RSS feed: