Goldman Sachs – because we’re worth it
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Okay, here it is – 14 pages which explain why Goldmanites deserve all that money.
And basically what it boils down to is this; they are smarter and more profitable than anyone else.
Selected highlights and graphics from Goldman Sachs Compensation Practices.
We operate in a human capital driven industry where we compete for the best talent available globally — Compensation for institutional financial services companies is the equivalent of other industries’ COGS and SG&A.
The institutional financial services business model when appropriately managed has produced significantly more attractive results for shareholders than other industries — Goldman Sachs generated an average pre-tax margin of 29% between 2000 and 2008, besting all the sectors in the Fortune 500.
Click to enlarge.
By tying compensation to performance, GS incentivizes employees to create long-term value for our shareholders.
GS has generated the highest average EPS growth rate, ROE and BVPS growth and still been able to pay out more on average per employee.
By maintaining a sizeable portion of compensation in equity awards that are restricted over an extended period of time, GS encourages employees to take a long-term, firmwide approach to performance.
According to Thursday’s Wall Street Journal, Goldman has been using this presentation to explain to shareholders why it set aside $16.7bn to pay employees in the first nine months of the year.
Wall Street firm Goldman Sachs Group Inc.—known for its outsize profits and unapologetically handsome pay packages to go with them—has begun meeting with major investors in an effort to ward off an investor backlash over its record compensation pool.
The private discussions are a first for Goldman, several shareholders said, as the Wall Street firm finds its self on the defensive over its pay, where employees are on track to earn an average of more than $700,000 apiece this year. The meetings are expected to last several more weeks and come as shareholders are filing proposals aimed at restricting pay at Goldman.
Related links:
Goldman Sachs Outlines Compensation Methods to Shareholders – Bloomberg
[Outlook 2010] Goldman sees 2010 as ‘exciting, with risks!’ – FT Alphaville
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