The top 1% at Goldman Sachs Group Inc. is expected to receive a special one-time reward, in addition to annual bonuses, in recognition of Wall Street titan's roaring success through the Pandemic.
The unusual payments to partners - the roughly 400 executives who fill out the investment bank's highest rung - will add millions of dollars to many compensation packages, according to people with knowledge of the matter who asked not to be identified discussing internal decisions. After a year of record earnings, that group is in line for larger payouts that range from a few million dollars to multiples of that.
Goldman s management, under pressure to fight aggressive poaching on Wall Street, views the extra boosts as a creative solution that will come with a warning: Recipients shouldn't mistake the bumps as part of a new pay floor, two of the people said. When compensation is set next year, managers will ignore the one-time payouts when making comparisons.
That lets Goldman leaders dip into the bank's pot of riches from 2021 to reward its most-prized employees, while trying to temper expectations and costs going forward.
One person said the payout was designed to be given exclusively in stock.
Bosses across Wall Street are sweetening payouts this year because of the restraint in the first half of a two-year trading and dealmaking boom that was unleashed by the Pandemic. They were wary of appearing extravagant amid Covid 19 outbreaks and uncertain the boom will last until the end of 2020. They are feeling pressured to open up their wallets to keep top producers happy and prevent them from jumping ship.
The Goldman partnership is a holdover from its 130 year history as a private company when its leaders put up their own capital to finance deals and trades. The partner title still holds symbolic value in the modern Goldman, signalling their top standing in the firm's hierarchy.
Over the past decade, the compensation spread between partner pay and rank-and-file managing directors had been squeezed due to a desire to keep a lid on costs.
The onset of the epidemic and the resulting dislocations and opportunities across markets has given a once-in-a-generation lift to Goldman's core trading and dealmaking operations. Those successes helped the firm post near record revenue in 2020 and beat that mark in just the first nine months of 2021.
The new reward is reminiscent of another moment in Goldman's past when the firm tried to keep its partners happy. After revenue fell more than 50%, the bank s leaders granted options that would soar in value if the stock rebounded.
There were millions of options that were meant to assuade executives that they were sulking over pay cuts this year. The stock recovered and shot up, so their value swelled handsomely in the decade after that, with holders reaping more than $3 billion.
Goldman's stock went up 45% last year, one of the big winners in the pandemic. With the price plateauing in recent months, investors have turned their attention to how the firm will fare in calmer markets. The bank will report fourth-quarter earnings on January 18 and is expected to make a more than 30% increase in revenue for the year.
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