Goldman Shows Restraint and Wins Big
Goldman Sachs is back on top, dwarfing analysts’ expectations with an impressive fourth quarter that saw the firm nearly triple its net income from a year ago.
Buoyed mainly by its investment banking and debt underwriting units, Goldman reported a fourth-quarter profit of $2.89 billion, up from $1.01 billion a year earlier. Another key to the strong fourth quarter: a leaner, more efficient workforce along with a decrease in the percentage of revenue allocated to employees.
Goldman employees earned, on average, $399,506 in 2012, up from $367,057 in 2011, according to Reuters. Goldman set aside $12.9 billion for employee compensation and benefits for 2012, or 37.9% of the firm’s revenue for the year, the second lowest percentage since Goldman went public in 1999. In 2011, the employee comp pool was lower – $12.22 billion – but represented 42.4% of total revenue.
The compensation breakdown surprised some analysts, and likely employees as well. As reported yesterday, analysts expected Goldman to set aside roughly $13.8 billion for employees, and that was with a more conservative revenue forecast.
Goldman had a banner quarter, one that should bring some optimism to a Wall Street that desperately needs it. The firm accomplished the feat with a smaller workforce – around 900 fewer employees – drawing a roadmap for how banks can thrive following the economic crisis. Goldman also showed restraint, rewarding its employees for a strong quarter while not drawing the ire of Wall Street haters.
As expected, J.P. Morgan took the axe to chief executive Jamie Dimon’s 2012 bonus following the “London Whale” trading fiasco. Dimon will take home $11.5 million, roughly half of what he made last year, despite the firm posting a record 2012 net income of $21.3 billion.
Want to command the respect of your employees? Try losing a couple pounds. New research suggests that larger waistlines and higher body-mass-index readings are often associated with less effective leaders.
Watching close competitors Wells Fargo and J.P. Morgan strike it rich with their mortgage businesses in 2012, Bank of America appears poised to reinvest in its home lending unit.
Simon Robey, the former co-chairman of global M&A at Morgan Stanley, and Simon Robertson, chairman of Rolls Royce Holdings, are joining forces to create a new corporate financial advisory firm known as Robertson Robey Associates.
Layoff Protocol (The Telegraph)
A new European Parliament report is calling for regulations that would require companies of a certain size to provide additional benefits to employees facing redundancies. Namely access to professional guidance and paid time off to look for new work.
Neil Passmore, a former executive director at J.P. Morgan, has been named as chief executive of Strand Partners, a known adviser to small and mid-cap companies.
William Barter, the head of U.K. investment banking at Nomura Holdings, has left the firm amid its restructuring effort.
Buzz Around the Office
If you’re ever in Washington D.C. and need a nice bathroom to use, try knocking on the door of the Department of the Interior. The private bathroom was recently renovated at a cost to taxpayers of around $220,000. What government official doesn’t need a Sub-Zero fridge under the sink?
List of the Day: Cover Letter Mistakes
Writing cover letters can be monotonous, but they’re critical to getting your foot in the door. Here are three common mistakes to avoid.
- Addressing the reader generically.
- Writing a brief note in the body of an email as a substitute.
- Not targeting your letter to the company and job in question.
