Goldman Employees Need More Money
The firm’s president, Gary Cohn, told a New York investor conference yesterday that it can’t cut pay further for its 32,400 employees without risking its ability to do business. Compensation expenses are down 40% since 2007, he said, while Goldman’s peers have cut comp by a mere 1% during the same time frame.
Cutting pay further may raise return-on-equity, Cohn said, but top talent will defect to competitors, or even to clients, who are willing to shell out more cash for Goldman-seasoned workers.
“Losing those good people will have a dramatic impact on revenue,” Bloomberg reports Cohn as saying.
To reduce overall costs, the firm has laid off more than 2,400 workers over the course of a year. During Goldman’s first-quarter earnings call, Chief Financial Officer David Viniar said the bank would “look for other means of efficiency” to help lower costs. It has been hiring in cheaper regions such as Salt Lake City, Dallas, Singapore and Bangalore, India, where employees can cost up to 75% less than those in banking hubs such as New York, Tokyo and London.
Let’s not cry too much for the bank’s employees. While Goldman set aside $4.4 billion for employee compensation in the first quarter, down from $5.23 billion in last year’s first quarter, that’s still enough to give each employee a six figure payout: $135,123 this year versus $147,825 last year. (Bloomberg)