Goldman Sachs Group, Inc (NYSE:GS)’s reins-in hiring to reduce pay-pool - JPM

Northern, WI 04/17/2013 (avauncer) - Goldman Sachs Group, Inc (NYSE:GS) (Closed: $144.10, Down by 1.61%) employed 400 less people this year. Its pay pool for the first quarter in $4.34 billion is below what it was a year earlier. In a statement, the new York-based company said that the compensation expense had stood at 44 percent in the 2012 first quarter which was now down to 42 percent of the revenue. This amount covers salaries, other benefits as well as accruals for bonuses that are given to employees at the end of the year. Goldman said that that it is sufficient to give $135,594 to each of its employees for the first quarter of the year.

The balancing act
In terms of assets, Goldman Sachs is the fifth largest bank in the United States and just like many other Wall Street firms is downsizing jobs and other costs in an effort to improve its shareholder returns. The 58-year-old Lloyd C. Blankfein, the company Chief Executive Officer has cut down compensation expenses by more than one third in the five years right through 2012 even as revenue dropped by 26 percent. Typically, Wall Street firms set aside a part of the revenue right through the year specifically for bonuses. This ensures that the company is able to adjust the pay line in tandem with performance.

The average pay is arrived at by dividing the total compensation as well as the benefits by the total number of employees and is not a representation of the exact amount that employees receive.

The perfect blend a myth
President Gary Cohn said that the Goldman stock had risen by 41 percent last year and was an indication that its shareholders and investors were considerably happy with the 2012 compensation decisions that the firm had taken. He said that it is never possible to get it perfect but that that they might have got it right this time. Considering that the market is so competitive right now, he said that the Goldman Sachs employees are compensated fairly well and what they receive is always relative to their contribution to the firm as well as to the firms share price.

At the JPMorgan Chase & Co (NYSE:JPM) (Closed: $48.49, Up by 1.17%) corporate and investment bank, in the first quarter, compensation dropped to $3.4 billion and had fallen by 7 percent.