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The one area where Goldman Sachs has failed

Maybe advisory firm Lewis Glass is just a really hard grader. Or maybe banks are back to their old tricks again when it comes to executive pay. One day after news broke that the proxy adviser gave Morgan Stanley a “D” for its pay policies, Lewis Glass handed out a failing grade to rival Goldman Sachs.

The rationale for the “F” was similar to the reasoning behind Morgan Stanley’s poor grade. The company paid executives more than its peers while the firm performed worse. As they did with Morgan Stanley, Lewis Glass urged shareholders to vote against the compensation plan and oust one of Goldman’s directors, pay committee chairman James A. Johnson, according to the Wall Street Journal.

The firm didn’t go into great detail on its findings, though a competing proxy adviser that gave Goldman a passing grade expressed concern over the wide discretion the bank gives its directors when it comes to pay allocation.

In fairness to Lewis Glass, Goldman paid Chief Executive Lloyd Blankfein $23 million for 2013, the most he’s earned in six years, despite the fact that the bank posted rather unspectacular fourth quarter results. He can also earn another $6 million if the bank hits certain targets.

The real headline, frankly, is that Goldman is doing all this while cutting pay for non-directors. Expenses for pay and benefits were down 3% in 2013 while the size of the workforce actually grew. Goldman’s pay-to-revenue ratio dwindled to just 37%, the second lowest in its history as a public firm.

Having your executive compensation plan scrutinized while cutting pay for rank-and-file employees isn’t the best look. Still, there likely isn’t too much grumbling. Average pay for all Goldman Sachs employees was  $383,000 for 2013, down from $399,000 in the previous year.

Why RBS Traders Stay (eFinancialCareers)

RBS traders seem to be at least as good as traders at other banks – if not better (in FX). However, the state-owned bank is a notoriously bad payer. So why do they stay? There are reasons.

Charges Could Cripple Banks (Bloomberg)

Unnamed lawyers and bankers are blasting federal prosecutors for threatening to criminally charge BNP Paribas and Credit Suisse. The fallout would severely damage each bank’s business in the U.S. and could harm the financial industry in general, they say.

Another U.S. Exec Leaves Barclays (NY Times)

Ros Stephenson, chairwoman of Barclays’ global banking unit, is leaving the firm to take a similar role at UBS. Stephenson, like former U.S. head Skip McGee, who left Barclays last week, is a holdover from Lehman Brothers. Their ilk appears disenchanted with Barclays and its new strategy.

Great Performance from Macquarie (Bloomberg)

Macquarie shares jumped on Friday after the Australian investment bank posted its highest full-year profit since 2008. So why aren’t they paying their junior bankers in New York any better?

Herbalife Investigation (Dealbook)

Investigators are looking into traders who placed well-timed bets on Herbalife, the company made famous by Bill Ackman’s $1 billion short. There are also questions as to whether Ackman’s Pershing Square Capital improperly encouraged other traders to short the stock.

High-Speed Investigation (Reuters)

The federal probe into high-frequency trading is progressing quickly. Investigators have sent subpoenas to several exchanges about their platforms and whether or not they offer unique advantages to some traders.

No More ‘Riding the Calendar’ (Reuters)

Morgan Stanley is cutting compensation for brokers who sit back and cash in from the issuance of new stocks and bonds that the firm underwrites, rather than aggressive selling its financial planning services. Some are seeing their compensation cut in half as the firm looks to energize its more apathetic advisers.

Buzz Around the Office

Squirrel Wrath (NY Post)

Visual evidence of why it is never a good idea to take a selfie with a squirrel.

Quote of the Day: “An escalator can never break: it can only become stairs. You should never see an ‘Escalator Temporarily Out Of Order’ sign, just ‘Escalator Temporarily Stairs.’ Sorry for the convenience.” – Mitch Hedberg

AUTHORBeecher Tuttle US Editor

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