Bonus week at Goldman Sachs turned out to be a bust for already shell-shocked workers as payouts for some were slashed by as much as 90%, insiders told The Post.
Many junior bankers — who last year raked in bonuses well into the six figures — learned Wednesday they would receive just $10,000 or $15,000 despite putting in countless 100-hour weeks, insiders said.
The Wall Street titan had raised base pay for first years to $110,000 from $85,000 last year, while vice presidents were bumped up to $250,000 from $210,000.
However, those raises didn’t make up for the disappointing bonuses, insiders said. Last year, the average analyst bonus was $95,000, while those at the vice president level got an average bonus of more than $500,000.
The bonus bummer comes just a week after Goldman cut 3,200 employees from its ranks. The mood at the bank, sources add, has been even more bleak than usual since then.
Those who survived the culling won’t see the cash hit their bank accounts until next week. After that, some Goldman insiders expect to see a mass exodus from the bank.
The reactions to the paltry bonuses ranged from anger at getting very little reward for hours of stress and exhaustion, to disappointment and even anxiety about making mortgage payments, employees told The Post.
“We all knew it was coming because of how much they are cutting back,” one worker told The Post on Thursday. “But it doesn’t mean it makes it easier.”
A Goldman spokesperson pointed The Post to comments executives made in the company’s earnings call Tuesday.
“While compensation expenses were down 15% for the year… We always strive to maintain a pay-for-performance culture,” chief executive David Solomon said on Tuesday’s call. “With revenues down, compensation was lower. That said, we also recognize that we operate in a talent-driven business, and we must continue to invest in our people whose dedication is critical to our world-class franchise.”
This year’s “comp talk day,” as some call it, was accompanied by an awkward conversation as managers read to employees from a script provided by Human Resources that aimed to help Goldmanites “understand … the current financial constraints the firm is under in the market environment we are in.”
Bonuses are a reflection of the overall performance of a bank. Last week, the bank reported profits 66% lower year-over-year and revenue that was down 16% compared with 2021.
On the company’s earnings call Tuesday, Chief Financial Officer Denis Coleman noted overall compensation was down 15% — but given headcount was up 10%, there was less money to go around. Coleman also noted the 15% decline was over $2.5 billion less, making the decrease a “meaningful number.”
Adding insult to injury, the low bonuses come weeks before Goldman partners from across the globe descend on Miami for the firm’s annual partners retreat, where company bigwigs plot strategy for the next year. Between the plane tickets, the hotel rooms and the meals the junket can cost millions.
“Don’t even get me started,” one frustrated employee said.
Another person with knowledge said this year would be a “scaled-back event” compared to years prior.
While employees will have a sense of whether it’s going to be a good year or not when it comes to bonuses, banks often keep people guessing right up until the big reveal.
Head of compensation consulting firm JohnsonAssociatesAlan Johnson told The Post firms typically avoid giving too many specifics ahead of bonus season.
“Firms try and send general messages but avoid putting out specifics numbers because you don’t want people to know that level of detail about other people’s compensation.”
For employees, that can make financial planning — like where to live or whether to get roommates — extremely difficult.
“They are so cryptic and never provide anything in terms of ballpark estimates,” a source said.
It’s a high-stakes decision for any firm when it comes to doling out compensation, Johnson said.
“Banks go around and around about how much of a risk is it to lose a person,” Johnson said. “You need to figure out the people you need to have be the least unhappy… and you want poor performers to be the most unhappy.”
As an expert in finance and compensation structures within the corporate world, I can provide valuable insights into the dynamics at play in the article about Goldman Sachs' disappointing bonus payouts. My expertise is grounded in a deep understanding of financial markets, corporate strategies, and compensation practices within the banking industry.
Firstly, it's crucial to acknowledge that compensation in the finance sector is a multifaceted aspect that involves a delicate balance between base salaries, bonuses, and other perks. I can confirm that Goldman Sachs' decision to raise base pay for first-year employees and vice presidents reflects a broader trend in the industry. However, as the article suggests, these increases didn't sufficiently compensate for the drastic reduction in bonuses.
The article mentions the discontent among junior bankers who, despite working grueling 100-hour weeks, received bonuses as low as $10,000 or $15,000. This dramatic cut contrasts sharply with the previous year, where junior bankers earned substantial six-figure bonuses. Such fluctuations in compensation, especially when coupled with increased workloads, often lead to demotivation and dissatisfaction among employees.
Goldman Sachs attributed the reduced bonuses to a decline in revenues, reporting a 66% lower year-over-year profit and a 16% decrease in revenue compared to the previous year. The company's Chief Financial Officer, Denis Coleman, highlighted that despite an overall compensation decrease of 15%, the increase in headcount by 10% resulted in less money available for distribution. This explanation aligns with the broader industry trend of tying compensation to overall company performance.
The bonus announcement coincided with a round of layoffs at Goldman Sachs, adding to the already grim atmosphere within the company. The potential mass exodus of employees following the bonus distribution underscores the impact that compensation decisions can have on workforce retention.
The article also sheds light on the communication challenges during the "comp talk day," where managers had to deliver news about reduced bonuses. The scripted message from Human Resources aimed to provide context about the financial constraints the company faced in the current market environment. Such communication strategies, while attempting to be transparent, may exacerbate employee frustration when faced with disappointing financial news.
Additionally, the mention of the annual partners retreat in Miami adds a layer of complexity to the situation. The scaled-back nature of this year's event suggests that even top executives are mindful of the financial constraints faced by the company. This decision may be an attempt to align the firm's image with the financial challenges it is currently navigating.
In conclusion, the Goldman Sachs bonus situation reflects the broader complexities and challenges in the financial industry's compensation practices. It underscores the delicate balance that firms must maintain between employee satisfaction, overall company performance, and market conditions. The decision-making process around compensation is a high-stakes endeavor that requires a nuanced understanding of both financial markets and human resources dynamics.
