Instead of paying its staff last quarter, Goldman Sachs bowed to public pressure and snatched money away from its staff.
Goldman beat analysts' average estimate for fourth-quarter earnings by 58 percent even though revenue of $9.62 billion was smack in line with estimates (and 23 percent below the third quarter). Compensation and benefits expense for all employees amounted to negative $519 million. The subtraction was achieved by reducing accruals for compensation made earlier in the year - presumably by paying out smaller bonuses than planned. It brought full-year compensation expense to $16.2 billion, some 20 percent below 2007's record $20.2 billion number.
"The big story is the compensation," buy-side analyst Keith Davis at Farr, Miller & Washington told Bloomberg News. "They got the message that politically they can't be paying out close to 50 percent of revenues anymore, at least for the time being. Obviously, that's the primary reason for the (earnings) beat."
Goldman Sachs Posts Record Profit on Bonus Pool Cuts [Bloomberg News]
Goldman: We've Never Stiffed Our Employees Like This Before [ClusterStock]
Goldman Profit Far Exceeds Forecasts [WSJ]
Morgan Stanley's James Gorman: Brokerage Recruiting Wars Are Over, For Now [Investment News]
London Finance Jobs Market Picks Up, Survey Says [NY Times]
Harris Williams Grows London Office [Investment Dealers' Digest]
Istithmar Chief Resigns, Amid Dubai Woes [NY Times]
Obama to Propose New Rules on Banks' Size, Trading [Bloomberg News]
At SEC, the System Can Be Deaf To Whistleblowing [Washington Post]
Tim Geithner: Now Officially A Lame Duck Until November 3, 2010 [ClusterStock]