Goldman Sachs and the $2bn 2016 stock bonus pool

No one knows how big the Goldman Sachs bonus pool is. Unlike some other European banks, the firm doesn't break out its spending on bonuses. We know it spent $12bn on compensation for its 34,400 staff last year, down 8% on the year before, but we don't know how much of that was salary and how much was bonus.

We do, however, know how much Goldman 'spent' on the restricted stock component of its 2016 bonus pool. The figure is buried in Goldman Sachs 2016 annual report, released yesterday.

The report states that Goldman issued 8.4m restricted stock units to its staff during the first quarter of 2017. Based on Goldman's share price of $2.44 in mid-January, this makes Goldman's stock bonus pool for 2016 worth ~$2bn.

Needless to say, the recipients of Goldman's $2bn of stock bonuses can't cash them in immediately. As per their name, restricted stock units come with restrictions and typically vest over a three year period. Even when fully vested, there are additional caveats meaning recipients aren't free to sell the stock until 2022.

Goldman's stock bonus pool is indicative of the size of its total bonus pool. Stock generally constitutes 50% or less of total bonus payments, suggesting Goldman's total pool - cash included -  is likely to have been around $4bn-$5bn for last year.

Trends in Goldman's stock bonuses may also be a proxy for trends in its total bonuses. This year, the firm massively cut the number of stock units it issued - from 15m in January 2016, a drop of 44%. However, with Goldman's share price up 55% between January 2016 and January 2017, the value of the restricted stock at the time of issuance was only down 15%.

Recipients of Goldman's January 2016 stock bonuses should feel thankful they couldn't cash them in immediately: they've gained an additional $1.3bn at current prices.

Contact: sbutcher@efinancialcareers.com