{"id":15159,"date":"2011-10-24T12:00:14","date_gmt":"2011-10-24T11:00:14","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=15159"},"modified":"2011-10-24T01:50:18","modified_gmt":"2011-10-24T00:50:18","slug":"goldman-execs-stay-fat-and-happy","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2011\/10\/goldman-execs-stay-fat-and-happy\/","title":{"rendered":"Goldman Execs Stay Fat and Happy"},"content":{"rendered":"

The investment bank had a lousy third quarter, but employees will still take home billions in bonuses. What gives? <\/em><\/p>\n

Today\u2019s Goldman Sachs earning reports provides a valuable lesson on how things really work inside Wall Street\u2019s largest investment houses. Goldman Sachs had an awful three months, losing $428 million in the third quarter of 2011, and yet it continued to shovel billions into the bonus pool it will share with its employees at year\u2019s end.<\/p>\n

Through the first nine months of 2011, Goldman set aside $10 billion in its compensation fund. If Goldman\u2019s 30,000 employees split that bounty evenly, that would work out to $333,000 per person\u2014plus the billions more Goldman will no doubt set aside in the last few months of the year.<\/p>\n

Of course, the receptionist inside Goldman Sachs doesn’t receive the same pay as all those analysts and other midlevel suits making salaries of $400,000 a year or more. Moreover, chieftains like Goldman CEO Lloyd Blankfein, who received $13 million in compensation last year, won\u2019t have to share their year-end bonuses with as many people as last year. The bank laid off 1,300 employees in the third quarter of the year and plans on jettisoning another 1,000-plus jobs in the coming months.<\/p>\n

Still, there are no doubt plenty of frowns inside Goldman today. For one thing, this was only the second time the investment bank has reported a quarterly loss since going public in 1999. For another, though this year promises to be a fat one, it won\u2019t be as rich as 2010.<\/p>\n

That $10 billion lags last year\u2019s bonus pool\u2014by 24 percent. But then the company\u2019s profits per share through the first nine months of the year were down more than 70 percent compared with 2010\u2014and Goldman’s stock since the start of the year has fallen by 43 percent.<\/p>\n

That\u2019s the beauty of working at a major investment bank. Performance doesn\u2019t matter nearly as much as just showing up.<\/p>\n

But that\u2019s the beauty of working at a major investment bank. Performance doesn\u2019t matter nearly as much as just showing up. Goldman booked $13 billion in pre-tax profits in 2010\u2014a steep drop from the $20 billion the bank booked in 2009. Despite a precipitous drop in profits between 2009 and 2010 and a stock stuck in neutral throughout the year, the Goldman board of directors raised Blankfein\u2019s base salary to $2 million, up from $600,000, and showered an extra\u00a0 $13 million in stock grants on Blankfein and his executive team.<\/p>\n

Not bad for the executives of a bank forced to pay a $550 million fine after being accused by the SEC of duping its clients by selling them shares of a mortgage-backed security they allowed a hedge firm to secretly hand-pick. Still, this is hardly like the fat and happy subprime-mortgage days, when Goldman was buying toxic subprime mortgages and selling them to unsuspecting clients. In 2007, the year before the economic collapse, Blankfein made $68 million in stock and bonus money.<\/p>\n

Is it any wonder the Occupy Wall Street crowd might think there\u2019s something rotten about the system?<\/p>\n

___________________<\/p>\n

Gary Rivlin is a special correspondent for Newsweek and The Daily Beast. He is the author of five books, including Broke, USA: From Pawnshops to Poverty, Inc.\u2014How the Working Poor Became Big Business. He has worked as a staff reporter for The New York Times, where his beats included Silicon Valley and New Orleans after Hurricane Katrina.<\/em><\/p>\n

Go to Original \u2013 thedailybeast.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Through the first nine months of 2011, Goldman set aside $10 billion in its compensation fund. If Goldman\u2019s 30,000 employees split that bounty evenly, that would work out to $333,000 per person\u2014plus the billions more Goldman will no doubt set aside in the last few months of the year. Is it any wonder the Occupy Wall Street crowd might think there\u2019s something rotten about the system?<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[],"class_list":["post-15159","post","type-post","status-publish","format-standard","hentry","category-capitalism"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/15159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=15159"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/15159\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=15159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=15159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=15159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}