Grim Comp Day at Goldman Sachs

Looks like some people got no bonus. Huge bummer.

By Liz Rappaport

Call it comp day, compensation communication, or this year, D-Day.

Goldman Sachs employees came to work today and learned how much they’ll be paid above their base salary for 2011, and most of them are not jumping for joy, said people familiar with the matter

European Pressphoto Agency
Some Goldman bankers and traders learned they’re taking home a big goose-egg. Some partners’ total pay was slashed by approximately half, while some employees in its fixed income trading unit saw their total pay reduced by as much as 60%, said people familiar with the matter.

Some bankers are doubly miffed because their stock awards are priced as of the close of trading Thursday, and Goldman’s stock has been on the rise in the past couple of days, meaning the bankers won’t get the cheaper strike price for their stock awards.

Its shares closed under $100 a share through most of November and December, a discount to the company’s so-called book value, but as of mid-day Thursday Goldman’s shares were up 10% over the past day and a half to $107.20. The shares gained over 6% Wednesday, even though the company reported a more than 50% decline in its quarterly profits.

Goldman staffers aren’t allowed to cash in their stock awards for five years. Cash bonuses don’t hit their accounts until the end of January, said a person familiar with the matter.

Goldman’s pay was lower than it has been in most recent years. The company has been in cost-cutting mode, slashing 2,400 jobs in 2011 and reducing compensation and benefits expenses by 21% compared with 2010. The company’s average pay per employee fell to its lowest level since 2008, to $367,000, from $431,000 in 2010.

More than half of Goldman’s employees make less than $100,000 as their base salary, meaning the per-employee average is skewed by the upper echelons at the company, said a person familiar with the matter.

Approximately 50 partners left Goldman in 2011 in a mix of retirements, departures to do other things, and encouraged or suggested exits, said one person familiar with the matter. The 50 is a high number of partners to leave Goldman in one year, but it is on the back of three years where there was a dearth of natural attrition, the person said. Goldman typically has roughly just over 400 partners, and had been running with 480 for a while.

Comp day came and went for Morgan Stanley employees on Wednesday, the day before the company reported an earnings loss today. Bankers there already knew their cash bonuses would be capped at $125,000. One Morgan banker said everyone was quietly dreading Wednesday.

J.P. Morgan Chase employees and top executives began receiving bonus information this week, said a person close to the situation. The majority will know the amounts by the end of this week. The bonuses are expected to be close to amounts doled out last year for the top management, including Chief Executive Officer James Dimon, after the bank earned a record $19 billion for the year. Some parts of the bank will see compensation drop, like the investment bank and Asset Management, while others area like the credit card unit were up.

BofA also reported its earnings Thursday, a profit gain, but its bankers don’t find out their pay for another week, said a person familiar with the matter.

However sad bankers and traders may be on Wall Street on comp day, Main Street likely isn’t shedding much of a tear. The American median household income is just under $50,000 last time the government checked.

http://blogs.wsj.com/deals/2012/01/19/grim-comp-d…