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Goldman Sachs Raises First-Half Pay Less Than Revenue

Photographer: Andrew Harrer/Bloomberg

Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein is controlling expenses to boost return on equity, a measure of profitability, above last year's 10.7 percent. Close

Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein is controlling... Read More

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Photographer: Andrew Harrer/Bloomberg

Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein is controlling expenses to boost return on equity, a measure of profitability, above last year's 10.7 percent.

Goldman Sachs Group Inc. (GS), the bank that gets most of its revenue from trading, set aside a smaller portion for staff pay in the first half and cut 300 jobs in the second quarter as it seeks to pare expenses.

Compensation, which includes salaries, benefits, bonuses and the expense of deferred pay awarded in prior years, rose 10 percent to $8.04 billion in the first six months, the New York-based company said today in a statement. Revenue in the same period increased 13 percent to $18.7 billion.

Chief Executive Officer Lloyd C. Blankfein, 58, is controlling expenses to boost return on equity, a measure of profitability, above last year’s 10.7 percent. Compensation was 38 percent of revenue in 2012, the second-lowest since Goldman Sachs has been a public company. The ratio of pay to revenue fell in the first half to 43 percent from 44 percent in the same period last year.

“The culture around compensation is really making sure that we continue to attract and retain all the best people,” Chief Financial Officer Harvey Schwartz said at an investor conference in May. “The firm now is running with 75 percent more capital now than it was before the crisis, and so we want to make sure that we do our best to get the balance right for our shareholders.”

The first-half compensation expense is enough to pay each of Goldman Sachs’s 31,700 employees $253,691 for the first six months of the year. The firm set aside $7.29 billion in the same period of 2012, equal to an average $225,789 for each of the 32,300 people employed by Goldman Sachs at the time.

Compensation for corporate and investment bankers at JPMorgan Chase & Co. (JPM), the largest U.S. lender, was almost unchanged in the first half from a year earlier. The $6.36 billion represented 33 percent of revenue at the unit, which was created last year when the company combined its investment bank with the corporate bank and treasury and securities-services units.

Figures for average pay don’t represent what any employee actually receives and are calculated by dividing the total compensation expense by the number of workers.

To contact the reporters on this story: Michael J. Moore in New York at mmoore55@bloomberg.net; Laura Marcinek in New York at lmarcinek3@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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