After the "controversy" this year of junior bankers claiming they are being overworked (stop us if you've heard that one before), Goldman Sachs is reportedly weighing whether or not it should raise salaries for its youngest employees.
There has been pushback from Senior Executives, who have argued that bumping up salaries mid-year could set a "dangerous precedent", FT reported this week, and break from the company's long-held “pay for performance” compensation structure.
Goldman could be following steps taken by banks like Citigroup, which offered an increase of up to $25,000 last week to move its fixed salaries to $100,000 per year. JP Morgan and Barclay's also lifted salaries to $100,000, from $85,000 at the end of June, FT notes. Bank of America and Wells Fargo increased salaries by $10,000 each, as well.
With Goldman the last to act, one senior executive commented to FT: “We should not participate in this game of moving salaries up and down every few months. If you behave like that you simply end up with mercenaries. We pay at the end of the year for performance.”
First year analysts at Goldman make, on average, $86,000 in salary plus a $37,500 bonus. Investment banking co-heads James Esposito and Dan Dees have already "promised that younger staff would be generously rewarded to reflect the bank’s surging earnings", according to the report. The bank, however, is reluctant to part from its pay-for-performance model.
Another executive commented: “We are still thinking through the split of the base and bonus. We are looking at what peers have done, not just in investment banking but in other industries. The war for talent is more fierce than ever before.”
“Goldman does not want to hire people for whom the most important thing is how many days they have to spend in the office. The others can have them,” another executive commented.
Recall, just days ago, we noted that Cantor Fitzgerald's CEO, Howard Lutnick, was pushing back on junior bankers that think they have life too tough. Lutnick said that junior bankers complaining about long hours and stressful demands should "rethink their career choice".
Lutnick's comments followed 13 junior bankers at Goldman complaining about their workload earlier this year in a slide deck that was released to the public. They claimed to be working 100 hour weeks and experiencing declining physical and mental health. The public scrutiny caused other banks to offer bonuses and rewards to retain their younger talent (and, more importantly, stave off a PR crisis).
But when interviewed last week, Lutnick broke from the crowd, stating: “Young bankers who decide they’re working too hard -- choose another living is my view. These are hard jobs.”
He continued: “There is a path to becoming an investment banker that requires an enormous amount of work including late nights and weekends. Clients want their deals finished under tight deadlines. You should know that going in.”
Lutnick also broke from the majority by stating he wanted his key employees back at their desks. The pandemic, combined with complaints from junior bankers, had led to some banks relaxing rules on working from home.
“That is our model. Front-office people are going to be working from the office and that will be a competitive advantage for the firm. Back-office staff, such as technical support, compliance and legal, can be more flexible."
Cantor's employees have been in the office since last summer and were given a June 1 deadline to come back to the office.
And with Goldman and Cantor once again whipping their junior bankers like rented mules, it's almost as though Covid is a forgotten memory and Wall Street is back, baby...