NEW YORK (Reuters) – Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) is slashing bonuses for senior level partners by 80 percent and capping the cash component of their payouts to $220,000, people familiar with the situation said, days after the bank announced its first quarterly loss in a decade.
Earlier this week Goldman reported a higher-than-expected loss of $2.1 billion for the quarter ended Nov. 28, capping a year when profit and revenue were slammed by the worsening financial crisis.
Compensation and benefit expenses for 2008 has been slashed in half to $10.9 billion across about 30,000 employees, or an average of $364,000 per person. Goldman cut more than 3,200 jobs worldwide as business conditions kept getting worse.
Now some of the most severe compensation cuts have been suffered by the firm’s partner managing directors, Goldman’s highest ranking and most generously paid executives.
The people familiar said partners will receive a maximum of $220,000 in cash, with the remainder comprised of stock-based deferred pay that is 35 percent restricted stock and 65 percent options. The stock units vest over three years with the first portion not vesting for one year.
Historically, Goldman partners received their deferred pay entirely in stock.
Annual bonuses usually represent the lion’s share of a Wall Streeter’s total compensation. But this year, salaries and commissions comprise the biggest portion of Goldman’s compensation expenses, with cash bonuses the smallest part.
A lot of Wall Street traditions went out the window this year, as the financial crisis drove Bear Stearns and Lehman Brothers out of business and nearly sank Goldman and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), who were forced to accept $10 billion investments from the U.S. Treasury, tap a variety of federal relief programs and convert from broker-dealers into deposit-taking banks.
Responding to popular outrage from taxpayers who did not want to see Wall Street executives get rewarded even as they accepted rescue funding, Chief Executive Lloyd Blankfein and six other senior Goldman executives will receive zero bonus.
For perspective, U.S. Census Bureau data show the median income for Americans is about $45,000. The average United Auto Workers member takes home about $60,000 a year.
(Reporting by Joseph Giannone; Editing by Bernard Orr)