Under European Union rules. Goldman Sachs has issued a lengthy declaration about how it pays staff at Goldman Sachs Group Holdings (UK)- its London-based business. You can see the document, which refers to 2011 but has only just been released, in its entirety here. Alternatively, here’s our brief summary of the salient points.
1. You wouldn’t get a multi-year guaranteed bonus at Goldman Sachs
The UK Financial Services Authority bans multi-year guaranteed bonuses, but Goldman nevertheless makes a special point of confirming its absolute opposition to them. “We believe that multi-year guarantees should be avoided entirely to avoid misaligning remuneration and performance,” it states.
2. Bonuses at Goldman Sachs weren’t just about profits and a strong performance appraisal
Bonuses at Goldman’s London investment bank are awarded in reference to: ‘Revenues net of variable expenses, adjusted net revenues, average Value at Risk (VaR), lost business, backlog, client team and activity, relationship lending history, principalling, key transactions, as well as performance reviews, conduct flags, franchise accretion, risk management, leadership and citizenship.’
3. Salaries at Goldman Sachs were no higher in London than they are elsewhere
Goldman says it operates a ‘global salary model’ to ensure consistency in pay. In other words, you won’t get a higher salary at Goldman Sachs in London than at Goldman Sachs in New York or Singapore.
4. Stock at Goldman Sachs vested in only three years
What with Deutsche’s five year cliff vesting for managing directors and with Nomura’s five year vesting programme for senior staff, receiving a bonus in stock which vests in only three years might seem appealing. Goldman’s restricted stock units vest over a three year period. However, there are ‘transfer restrictions’ mandating that even if stock has vested, it can’t be entirely sold during the first five years following its allocation.
5. Goldman’s London investment bankers accounted for far more of its compensation bill than its asset managers or compliance staff
As the table below shows, Goldman’s investment bankers were allocated 76% of the restricted stock it paid in London last year and 65% of its remaining non-equity compensation.
6. A large amount of compensation at Goldman Sachs takes the form of restricted stock
As the table below shows, Goldman’s ‘code staff’ (defined here, including heads of business and senior risk professionals) received a lot of their compensation in the form of restricted stock last year. 1,384 restricted stock units (RSUs) were awarded. According to the Guardian, each Goldman RSU was worth $107, implying that 95 code staff received a shared $148m in restricted stock, or $1.6m each.
7. There were no bonus clawbacks at Goldman Sachs International in 2011
Banks like Deutsche operate punitive bonus clawbacks and will claw back stock bonuses if employee’s business area makes a loss. Goldman’s clawbacks look mild by comparison. In the UK, the bank will claw back stock only if the bank as a whole is deemed to be in default, if the bank fails to maintain appropriate levels of tier 1 capital for 90 days, or if an employee engages in a transaction with appropriate consideration of the risks involved and the consequences are serious. Last year – as the table below shows – none of Goldman’s stock bonuses were clawed back at all.
8. In 2011, the average member of code staff at Goldman Sachs International earned $1.3m in cash
Finally, Goldman shared $125m in non-equity remuneration between 95 code staff in 2011. This worked out at $1.3m each.