From Bloomberg today comes news that Goldman Sachs has set aside $16.2 billion for compensation. This represents more than profits for the year and more than a third of revenues. As the report notes:
No shit!The amount, 35.8 percent of revenue, is enough to pay each of the 32,500 employees $498,246. That compares with an average pay of $316,928 a year earlier and is down from the record $661,490 in 2007.
Goldman Sachs, which set a Wall Street pay record in 2007, has been pilloried for its pay practices after getting taxpayer aid during the financial crisis. In response, the company subtracted $519 million in the fourth quarter from the compensation fund set aside during the year and instead made donations to a firm philanthropy.
“It’s still a really big number,” Jon Fisher, who helps manage $18.25 billion as a portfolio manager at Fifth Third Asset Management in Minneapolis, said before the earnings today. “That has a shock factor and gets people’s ire up and really irritates politicians.”
We are constantly told that we need to pay these amounts to retain talent. What talent? These masters of the universe almost destroyed the world economy, swindled governments out of enough money to solve every social ill on the planet and now want to be rewarded for their stellar performance?
Years ago, televangelist Jimmy Swaggert climbed a flagpole and announced he would die up there unless doners ponied up half a million dollars. I felt that this was the ultimate "win-win" situation -- lose Swaggert and save a whole bunch of money.
I think we have the same opportunity now. If they can find greener pastures elsewhere, we are all better off. And we can save money. Lots of it. It gets no better than that.
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