At Goldman, the Average Pay for Three Months Is $135,594

Goldman Sachs Group headquarters in New York, on April 15 Photograph by Victor J. Blue/Bloomberg

Goldman Sachs is fighting to keep compensation costs under control. But “under control” is a relative concept.

According to its earnings statement released today, the company set aside $4.34 billion to pay employees in the first three months of 2013. As Bloomberg’s Michael J. Moore reports, that sum amounts to an average of $135,594 per person in salaries, bonuses, and benefits in a firm with 32,000 employees. Multiply that quarterly amount by four and you get better than half a million dollars in annual compensation, per worker. A figure, by the way, that’s dragged down by the secretaries, clerks, and other support staff who make far less.

April 16 (Bloomberg) -- Brad Hintz, senior analyst at Sanford Bernstein, and Bloomberg Contributing Editor Bill Cohan examine first-quarter results from Goldman Sachs and look at where the company can go from here. They speak on Bloomberg Television's "Market Makers."

Goldman Chief Executive Officer Lloyd Blankfein can’t trim pay significantly or he’ll lose top performers, says Kenneth Leon, an analyst at Standard & Poor’s Capital IQ unit. “They can go to more nimble investment banks like Lazard, or they can go to private equity, where they can make a lot more money,” Leon says. “That does happen, all the time.”

So rather than reduce pay per person, Blankfein is focusing on trimming headcount. The company employed about 400 fewer people in the first quarter than it did a year earlier, which allowed Goldman to reduce by about 1 percent the amount it set aside for compensation. Over the past five years, Goldman has managed to trim compensation costs by more than a third, while revenue fell 26 percent, Bloomberg says.

Blankfein himself got a stock bonus of $13.3 million for last year’s performance. He also got a cash bonus and salary, probably boosting his total pay to a little more than $20 million. That sounds like a lot to the average wage earner, but it’s nothing next to the money made by the giants of hedge funds and private equity. David Tepper, who runs the Appaloosa Management hedge fund, earned about 100 times as much as Blankfein last year: $2.2 billion, according to Institutional Investor’s Alpha survey, cited by the Financial Times.

The lure of hedge funds and private equity is strong, but the more Goldman pays its people, the less money it has left over to give to shareholders in the form of dividends. A 41 percent rise in Goldman’s stock last year shows that shareholders were “relatively happy” with the company’s compensation decisions, Gary Cohn, Goldman’s president and chief operating officer, told Bloomberg Television in January at the World Economic Forum in Davos, Switzerland. “Relative to the competitive landscape that we operate in, our people got paid relatively fairly,” he said.

Traders are among the highest-paid employees at Goldman. But trading was the weak spot in the first-quarter earnings report. Revenue from trading stocks and fixed-income products fell 12 percent to $5.2 billion, excluding accounting charges. (Overall the company’s net income rose 7 percent, beating analysts’ expectations, on a 1 percent revenue gain.)

If Goldman can’t rev up its trading business, it may need to slough off more of the expensive people on those desks. “Goldman’s trading expertise has less value right now because they can’t deploy it as they used to,” Brand Hintz, an analyst at Sanford C. Bernstein, told Bloomberg Television today.

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