The Daily Beast
The investment bank had a lousy third quarter, but employees will still take home billions in bonuses. Goldman Sachs earning reports provides a valuable lesson on how things really work inside Wall Street’s largest investment houses. Goldman Sachs had an awful three months, losing $428 million in the third quarter of 2011, and yet it continued to shovel billions into the bonus pool it will share with its employees at year’s end.
Through the first nine months of 2011, Goldman set aside $10 billion in its compensation fund. If Goldman’s 30,000 employees split that bounty evenly, that would work out to $333,000 per person—plus the billions more Goldman will no doubt set aside in the last few months of the year.
That $10 billion lags last year’s bonus pool—by 24 percent. But then the company’s profits per share through the first nine months of the year were down more than 70 percent compared with 2010—and Goldman's stock since the start of the year has fallen by 43 percent.
But that’s the beauty of working at a major investment bank. Performance doesn’t matter nearly as much as just showing up.But that’s the beauty of working at a major investment bank. Performance doesn’t matter nearly as much as just showing up. Goldman booked $13 billion in pre-tax profits in 2010—a steep drop from the $20 billion the bank booked in 2009. Despite a precipitous drop in profits between 2009 and 2010 and a stock stuck in neutral throughout the year, the Goldman board of directors raised Blankfein’s base salary to $2 million, up from $600,000, and showered an extra $13 million in stock grants on Blankfein and his executive team.
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