Goldman Full Year Compensation Per Employee: $498,153, Firm Reports Negative Compensation Expense In Q4
Goldman reported a blow out EPS number today on a minor miss to revenue: this was mostly due to a substantial cut to employee compensation accrual, which went down from an annualized accrual of $20 billion previously to $16.193 billion for FYE 2009. In fact in Q4, Goldman reported a negative expense to compensation and benefits of ($519) million compared to $5.351 billion in Q3. Did Rahm have some tete-a-tetes with Lloyd recently? With 32,500 FTE, per employee compensation was $498,153. We will provide bonus numbers for some key individuals in the days ahead.
From the filing:
Compensation and benefits expenses were $16.19 billion for the year and were 35.8% of net revenues. [This is materially lower from the recent historical average of 46.7%] This ratio of compensation and benefits to net revenues was down from 48% for 2008 and represented the firm's lowest annual ratio of compensation and benefits to net revenues. In the fourth quarter, compensation was reduced by $500 million to fund a charitable contribution to Goldman Sachs Gives, which is reflected in the negative compensation and benefits expenses of $519 million for the quarter.
Another relevant data point: VaR for Q4 dropped from $208 million to $181 million, mostly due to a decline in interest rate VaR and an increased Diversification Effect from (87) to (103), which we still are curious as to how this is calculated, while equity prices VaR surprisingly increased from $51 in the year ago and $74 in the quarter ago to $89. The same thing with commodity prices which is now at the high side of the channel, coming in at $38. Is Goldman becoming too complacent with its expectation that there will be no volatility in the interest rate market? With Goldman expecting a substantial tightening in 10 years, even as Morgan Stanley sees a dramatic increase in 10Y yields, what happens if Goldman is right and MS is wrong? We will have much more to say on long bond rates later today. The answer may shock you.