Goldman Sachs CEO David Solomon slashes pay for his employees as revenue drops

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David Solomon, Goldman SachsAndrew Harrer | Bloomberg | Getty Images

Being a Goldman Sachs trader or banker is about to get less lucrative.

The bank cut compensation and benefits set aside for employees in the first quarter by 20% to $3.26 billion, or about $90,780 for each of the bank’s 35,900 workers. A year ago, that figure was $119,323 for each of the bank’s 34,000 workers.

That’s Goldman’s estimate of its employees’ share of revenue for just the first three months of the year, meaning that the bank will set aside more in pay as 2019 progresses. For senior traders and investment bankers, most compensation comes in the form of year-end bonuses paid early next year.

Goldman posted first-quarter revenue that missed analysts’ expectations, dropping 13% to $8.81 billion amid a tougher market for the trading and investing businesses. But it beat analysts’ expectations for profit, posting an 18% drop to $5.71 a share, the New York-based firm said in a release, higher than the $4.89 estimate.

The lion’s share of that beat came from setting aside less for pay than analysts had expected, which might just be a “pull forward” of what the bank would do later in the year, according to Citigroup analysts led by Keith Horowitz.

The first question analysts had on Monday for management was about compensation. While CFO Stephen Scherr said there was no shift in compensation policy, he encouraged analysts to look at the bank’s overall expenses rather than just pay.

That’s because Goldman is investing in new platforms in corporate and consumer businesses, meaning that more dollars will be shifted into technology rather than human labor.

Goldman shares dropped 2.9 percent at 10:30 a.m. in New York trading.

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