Goldman Dangles New Bonuses for Select Few on Top of Surging Pay

Goldman Dangles New Bonuses for Select Few on Top of Surging Pay

Goldman Sachs Group Inc. is planning yet another way to juice pay for its top brass as special rewards pile up after a bumper year.

First came heftier bonus payouts on the back of record earnings, followed by one-time stock grants for its exclusive partnership class. Now, for about 30 of the most senior leaders in that club, there’s a different, more lucrative perk coming in what’s emerging as the Wall Street titan’s most generous year in more than a decade.

Goldman Dangles New Bonuses for Select Few on Top of Surging Pay

The new equity awards will be doled out to members of Goldman’s management committee, its top decision-making body, according to people with knowledge of the plan. The packages are designed to cajole executives to stick around longer by putting them in line to unlock millions of dollars if the bank stock hits certain targets, the people said.

A spokesman for Goldman Sachs declined to comment on the new rewards. The new grants would be offered in place of the one-time, guaranteed stock award that’s been presented to other partners, one of the people said. It would be structured similar to the incentive awards announced in October for Chief Executive Officer David Solomon and his deputy, John Waldron, who aren’t included in this latest round of grants.

The measures are one way for the firm to try and stem defections from its leadership as Goldman mines record profits from its core Wall Street operations. But rising compensation costs are starting to give shareholders pause. Since the company posted annual results early this week, the stock has dropped almost 9%, with investors focused on a 33% jump in personnel expenses.

Across Wall Street, bank CEOs including JPMorgan Chase & Co.’s Jamie Dimon and Bank of America Corp.’s Brian Moynihan are pledging to reward employees amid heightened competition for talent. But so far none have appeared to be as ready as Goldman to open their wallets wider for the most senior executives. 

Goldman Dangles New Bonuses for Select Few on Top of Surging Pay

The New York-based investment bank had already privately outlined plans for a major boost to its bonuses, especially the pool for dealmakers, which rose more than major competitors. Pay for some of Goldman’s top performers at the firm is expected to surpass $30 million. And as Bloomberg reported last week, it’s giving extra attention to its top 1%, handing members of its partnership class -- the firm’s highest rank -- special one-time stock awards that would add millions of dollars to many compensation packages.

That’s in recognition of a banner year: Revenue surged by a third, and the bank’s $21.6 billion of net income was greater than in the prior two years combined.

Still, just as that momentum was building, Solomon lost key lieutenants atop money-making operations, some of whom landed more lucrative jobs elsewhere. Former investment-banking head Gregg Lemkau now runs Michael Dell’s MSD Partners. Former asset-management chief Eric Lane is now president at tech-investing behemoth Tiger Global Management. And most recently, Stephen Scherr departed his post as chief financial officer at the end of 2021. 

In recent months, investors have been growing more concerned about how well investment banks will continue to fare if the market frenzy set off by the pandemic ebbs. Goldman’s stock has tumbled 18% since its peak in November.

On a conference call to discuss earnings this week, Solomon and new CFO Denis Coleman took turns fielding questions about the jump in compensation expenses, describing the need to maintain a winning team.

Prodded by an analyst to explain the compensation costs, Solomon cited “real wage inflation everywhere” as one reason. The remark raised some eyebrows among veterans on Wall Street, because inflation isn’t typically much of a factor in setting bonuses, often the largest variable in annual pay.

Solomon and his deputies have explored other ways to boost their own pay. As Bloomberg reported last month, senior executives floated the idea of partaking in a cut of the rewards thrown off by Goldman’s own special purpose acquisition companies. That proposal called for the bank to allocate more founder shares in the blank-check vehicles, giving upper management a chance to profit handsomely if the investments succeed.

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