This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Goldman Pays Up for Talent, Sending Profits Down
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Goldman Pays Up for Talent, Sending Profits Down
Markets

Goldman Pays Up for Talent, Sending Profits Down

Editorial Board Published January 18, 2022
Share
Goldman Pays Up for Talent, Sending Profits Down
SHARE

The bill has come due for Wall Street’s deal-making spree, and it is being sent by human resources.

Investment-banking units across the industry have notched blockbuster results in the pandemic, first from nervous companies that wanted to raise debt and then from confident CEOs who wanted to expand their empires. Raucous markets pushed trading revenues skyward. Firms like Goldman have raced to hire enough people to keep up with the flood of deals and are now paying to keep them from jumping ship.

Wall Street tried to keep the lid on pay in 2020 as business boomed but the overall economy languished. Goldman raised compensation by 8% in 2020, even though revenue jumped 22%.

In 2021, Goldman boosted its pay by 33%. Revenue also jumped 33%.

“There is real wage inflation everywhere in the economy,” Goldman CEO David Solomon said on a call with analysts.

Shares fell nearly 7%.

Like JPMorgan and Citigroup, Goldman recorded big profits for the full year. Goldman’s investment bank reported record annual revenue and its trading unit booked its highest annual revenue in 12 years, driving the firm to record annual revenue and profit.

But the compensation expenses weighed on fourth-quarter results. Goldman’s fourth-quarter profit declined 13% to $3.94 billion, or $10.81 per share, ending what had been a streak of big gains. The bank also missed analysts’ forecasts for per-share earnings.

Goldman’s revenue rose 8% to $12.64 billion, beating expectations.

Wall Street’s battle for talent has played out at all levels. Multiple firms raised salaries last year for junior bankers, many of whom found the grunt work of entry-level banking less appealing when they were doing it from home. Goldman, for example, increased base pay for its entry-level employees—first-year analysts—to $110,000, a nearly 30% increase from the previous starting salary of $85,000.

At senior levels, pay is largely in the form of stock awards and can stretch into the millions.

The American workforce is rapidly changing. In August, 4.3 million workers quit their jobs, part of what many are calling “the Great Resignation.” Here’s a look into where the workers are going and why. Photo illustration: Liz Ornitz/WSJ

Goldman is also giving its partners an additional one-time stock bonus. The additional grant was first reported by Bloomberg News.

JPMorgan this week is awarding investment bankers bonuses from a pool that is 30% to 40% higher than it was a year ago, according to a person familiar with the matter.

“We will be competitive in pay,” JPMorgan CEO Jamie Dimon said last week on a call with analysts. “If that squeezes margins a little bit for shareholders, so be it.”

Some firms, like Citigroup, are using their more-flexible work-from-home policies as a recruiting tool. Goldman and JPMorgan were more aggressive last year in calling employees back to the office, though Goldman told employees last week that they could work from home until Feb. 1 because of the Omicron variant.

Mr. Solomon said Tuesday he expects Covid-19 will become endemic and that “as a society we will find a way to live with it.” He said he is optimistic that Omicron’s economic impact will be relatively muted compared with earlier variants.

Mr. Solomon also said that Goldman will be “flexible and dynamic” with protocols, “while also enabling the majority of our people to be back in the office safely.”

Overall, Goldman continued to benefit from ebullient deal making. Investment banking revenue jumped 45% to $3.8 billion, with demand for mergers and acquisitions still brisk. JPMorgan and Citigroup last week also reported big gains in investment-banking fees.

Trading revenue was $3.99 billion, down 7% as pandemic-induced volatility in capital markets subsided. Trading revenue fell 11% at JPMorgan and 17% at Citigroup.

Bond-trading revenue of $1.86 billion was essentially flat from a year earlier, while stock-trading revenue shrank 11%.

While profits are still flowing from Wall Street, Goldman is working to grow its businesses that cater directly to consumers. Revenue from its consumer and wealth management unit, which includes the Marcus consumer bank and the team serving wealthy clients, rose 19% in the fourth quarter. Consumer banking revenue grew 8% as consumers carried higher credit card balances.

The bank’s return on equity, a measure of how profitably it uses shareholders’ money, was 23% in 2021 after a return of 11.1% in 2020. In January 2020, Goldman set a target return of at least 13% by 2023. “The story I’m proud of is our outperformance on a relative basis,” Mr. Solomon said in an interview.

—David Benoit contributed to this article.

Earnings Picture

Read more articles on earnings in the banking sector, selected by WSJ editors

Write to Charley Grant at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Netflix Gives Its Toughest Audience What It Wants Netflix Gives Its Toughest Audience What It Wants
Next Article Sonia Sotomayor refusing to enter Supreme Court because Neil Gorsuch won’t wear mask: Report Sonia Sotomayor refusing to enter Supreme Court because Neil Gorsuch won’t wear mask: Report

Editor's Pick

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Studying Time: 3 minutes Brooke Hogan isn’t in her dad’s will, a brand new report reveals. Regardless of years of…

By Editorial Board 4 Min Read
Workforce of rat-hunting terriers helps remedy Bay Space metropolis’s infestation drawback
Workforce of rat-hunting terriers helps remedy Bay Space metropolis’s infestation drawback

Recognized for his or her innate looking talents, these small furry pals…

3 Min Read
Males’s Pure Skincare Is Booming — Right here’s Why Horace Is on the Heart of It | Fashion
Males’s Pure Skincare Is Booming — Right here’s Why Horace Is on the Heart of It | Fashion

We independently consider all advisable services. Any services or products put ahead…

22 Min Read

Oponion

IBM Cloud Makeover Shows Results

IBM Cloud Makeover Shows Results

International Business Machines Corp.’s yearslong makeover into a hybrid cloud…

January 26, 2022

Snowstorm cancels greater than 1,000 flights, delays a whole bunch of others throughout US

Journey + Leisure Co. CEO Mike…

January 6, 2025

Single household residence sells for $2.3 million in Dublin

Bay Space House Report 2122 Avanti…

February 14, 2025

Civil service relocation and AI officers at coronary heart of presidency price reducing measures | Politics Information

AI civil servants and sending human…

May 14, 2025

The Function of Outsourced Name Centres in Enhancing IoT Buyer Assist

Reworking Name Centre Companies with IoT…

January 16, 2025

You Might Also Like

Markets now betting Fed will minimize charges in September after disappointing jobs report
Markets

Markets now betting Fed will minimize charges in September after disappointing jobs report

Morgan Stanley Wealth administration CIO Lisa Shalett joins ‘Barrons Roundtable’ to research the present market outlook for traders after the…

3 Min Read
ETF buyers take ‘man of steel’ view, inflows on tempo for file 12 months
Markets

ETF buyers take ‘man of steel’ view, inflows on tempo for file 12 months

Vertiv CEO Giordano Albertazzi discusses AI energy firms on 'The Claman Countdown.' Regardless of the whiplash of President Donald Trump’s…

4 Min Read
Tesla grants Musk large pay deal to maintain CEO on board amid authorized battle
Markets

Tesla grants Musk large pay deal to maintain CEO on board amid authorized battle

William Blair power and energy applied sciences group head Jed Dorsheimer discusses what to look out for after the Tesla…

4 Min Read
Microsoft joins unique T market cap membership after AI surge, becoming a member of just one different firm
Markets

Microsoft joins unique $4T market cap membership after AI surge, becoming a member of just one different firm

Angelo Zino, a CFRA Analysis senior fairness analyst, discusses the efficiency of Microsoft, Meta and the general tech sector within…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?