Goldman staffers take biggest pay cut on Street

Published Wed, Apr 20 20162:46 PM EDT

Breakingviews

Antony Currie

Goldman Sachs staffers are paying for their wrong-footed bosses. Average compensation, including money socked away for annual bonuses, fell 44 percent in the first quarter from a year ago. That's far more than employees at either JPMorgan or Morgan Stanley suffered. A revenue slump contributed, but Goldman also has been slow to react to a market slowdown. The top line at the bank led by Lloyd Blankfein tumbled by 40 percent in the first three months of the year. Morgan Stanley's dropped by almost a third, while the combined top line of JPMorgan's corporate and investment bank and its asset-management unit fell by about a fifth. At the same time, Goldman increased its ranks by some 7 percent, to 36,500, while its two rivals held steady. Goldman's delay in cutting back in lackluster businesses also has become more glaring. Morgan Stanley started laying off some 1,200 people from its investment bank in December. That helped reduce headcount by 2.5 percent through March as it reacted to concerns about the profitability of its fixed-income trading unit. More from Breakingviews : Marissa Mayer has only one last job to do at Yahoo By the end of last month, Goldman had reduced its workforce by less than 1 percent, which implies hiring continued even as the company underwent its ritual, early-year cull of about 5 percent of staff. Blankfein is now embarking on more cost cuts, according to Bloomberg, from trimming headcount to reining in travel expenses. That leaves the bank's executive committee in the odd position of playing catch-up. It may still be hard to bulk up the bonus pool to last year's level. On Wall Street, the first quarter typically generates the most revenue. There is a silver lining, however. A recent thinning of senior employees has made way for more junior, lower-paid bankers. That should dull some of the impact of the headline pay chop. Shareholders also can take some comfort that pay is down more than revenue. Interests are at least aligned in the latter going up. For more independent commentary and analysisfrom Reuters Breakingviews, visit breakingviews.com

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