Goldman Sachs’ most elite rank to receive millions in special payouts – World Affairs SRS

Goldman Sachs’ most elite rank to receive millions in special payouts

– World Affairs SRS

The top 1% at Goldman Sachs Group Inc are set to receive a special one-time reward in addition to an annual bonus, in recognition of the Wall Street titan’s roaring success through the pandemic.

The unusual payments to the partners — about 400 executives who fill the investment bank’s highest rung — would add millions of dollars to multiple compensation packages, according to people with knowledge of the matter, who asked not to be identified to discuss internal decisions. That group is already in line for huge payouts that range from a few million dollars to multiples thereof after a year of record earnings.

Goldman’s management, under pressure to stop the increasingly aggressive poaching on Wall Street, promotes the extra in the form of a creative solution that will come with a caveat: recipients shouldn’t mistake bumps as part of a new pay floor. , said the two men. When the compensation is determined next year, managers will ignore the lump-sum payment when making comparisons.

It lets Goldman leaders dip into the bank’s pot of money to reward its most prized employees from 2021 onwards, while trying to keep up with expectations and costs.

The payout is specifically designed to be provided in stock, said one of the people.

A representative for Goldman declined to comment.

Wall Street bosses are sweetening the payout this year after showing restraint in the first half of two years of trading and a boom in handling of the pandemic. In late 2020, they were wary of looking exceptional amid the outbreak of COVID-19 and were unsure if the boom would last. Now, they are feeling the pressure to open their pockets to keep top manufacturers happy and prevent them from jumping in.

The Goldman partnership is a holdover from its 130-year history as a private company, when its leaders put their capital to finance deals and trades. In the modern Goldman, the partner title still carries symbolic value, indicating their top position in the firm’s hierarchy.

Executives, many of whom lead teams in company operations, typically receive a base salary of around $1 million that is typically reduced by their year-end cash and stock bonuses. Over the past decade, the compensation spread between partner pay and rank-and-file managing directors was being squeezed amid a desire to keep a lid on costs.

But the onset of the pandemic and the resulting dislocations and opportunities in the markets have thrown Goldman’s core business and dealmaking functions out of line for generations. Those successes helped the firm post near record revenue in 2020, and eclipse that mark in the first nine months of 2021.

The new reward is a reminder of another moment in Goldman’s past when the firm sought ways to keep its partners happy. In late 2008, after revenues fell by more than 50%, bank leaders offered options that would increase in value if the stock rebounded.

Those millions of options were intended to placate executives angered by the pay cuts that year. Their value soared well into the decade that followed, with holders recovering more than $3 billion as the stock recovered and shot up.

Goldman’s stock was one of the big winners in the pandemic, climbing 45% last year. But investors have already turned their attention to how the firm will perform in calm markets, with prices falling in recent months. The bank will report fourth-quarter earnings on January 18 and expects revenue to grow by more than 30% for the year.

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