Goldman Showers Execs With $100 Million In Early Bonuses To Avoid Trump Tax Hit

Goldman Sachs has accelerated nearly $100 million in stock awards to top executives before the end of the year in order to avoid unfavorable changes in the new tax code, according to public filings posted Friday. 

The most sweeping overhaul of U.S. tax code in 30 years includes a provision which caps a corporate deduction for executive pay; under current law, corporations can deduct up to $1 million per executive's base salary, however there's no cap on deductions for performance-based pay, such as bonuses. 

Under the new provisions, both base salary and performance bonuses count towards to $1 million cap - which is why Goldman accelerated $94.8 million in bonuses originally scheduled for January, 2018. By paying the bonuses early, the bank will save money on its own tax bill.

Most of Goldman's executives received early payouts - including of course, CEO Lloyd Blankfein. 

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Lloyd Blankfein

In a similar move, Netflix also announced it would change its executive compensation plan for 2018 in response to the new Tax Law. The company said in a public filing posted Thursday that it's going to start paying some of its top executives higher salaries, and tie less of their compensation to performance, citing the law change.

Accelerated bonuses aren't the only thing at least temporarily grinding Goldman's gears about the new tax code. As we discussed yesterday, in a Friday 8-K filing with the SEC, Trump's "repatriation tax" is going to knock approximately $5 billion off the company's profits in Q4 2017 in the form of a one-time repatriation charge. 

[T]he enactment of the Tax Legislation will result in a reduction of approximately $5 billion in the firms earnings for the fourth quarter and year ending December 31, 2017, approximately two-thirds of which is due to the repatriation tax.

The remaining 1/3 of Goldman's $5 billion hit "includes the effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates," making it more difficult for them to deduct past losses from future tax bills.

Goldman, which is due to report fourth-quarter results on January 17, said: “The impact of the tax legislation may differ from this estimate, possibly materially, due to, among other things, changes in interpretations and assumptions the firm has made, guidance that may be issued and actions the firm may take as a result of the tax legislation.”

Previously, Barclays estimated this change would  cost the bank around GBP1BN ($1.35BN).

Barclays said the change had reduced the value of its deferred tax assets and would result in an associated one-off charge of about GBP1bn after tax.

It is expected to drag Barclays full-year earnings further into the red. The bank lost #628m in the first nine months of the year due to write-offs related to pulling out of African ventures.

On the bright side, the US corporate tax rate has been cut from 35% to 21% with the new law, which supposedly will "trickle down" to ordinary Americans. In reality, all it will achieve is fund even more stock buybacks, and benefit, drumroll - Goldman Sachs. After all, the tax changes were overseen by treasury secretary, Steve Mnuchin - a 17 year Goldman vet who declared the bill to be "great for hardworking workers."

Comments

Honest Sam Sat, 12/30/2017 - 10:23 Permalink

 " yada......After all, the tax changes were overseen by treasury secretary, Steve Mnuchin - a 17 year Goldman JEWISH vet who declared the bill to be "great for hardworking workers."

The complete story in one sentence.

Pool Shark heavens-door Sat, 12/30/2017 - 12:17 Permalink

But those in $1 to $3 million homes DO, and they are gonna get whacked with both the $750K mortgage cap and $10K SALT cap.

btw, kinda funny that GS is paying bonuses early to lower ITS tax bill, while screwing it's employees who will be paying higher taxes on THEIR income in 2017 before the rates are lowered next year.

If you can still do so, take deductions NOW (before end of year) and push income into NEXT YEAR. Your deductions are worth more in 2017, and your income will be taxed at a lower rate in 2018.

In reply to by heavens-door

HRClinton troubadourcapital Sat, 12/30/2017 - 12:56 Permalink

Here is the reality:

That $2500 tax cut will be eaten up by health care and food. And we won't even mention education.

These Middle/Middle class "cuts" are a ploy, to distract from the heaps of money to be bestowed upon the Plantation Owners, the Klepto-Plutocrats...

Who will promtly send it to Wall St. Thump will then claim how good it is.

More Kool-Aid(K), anyone? It's Kosher.

In reply to by troubadourcapital

Bemused Observer troubadourcapital Sat, 12/30/2017 - 16:30 Permalink

If that is the reality, that would be fine. If this tax bill actually does put more money into the average guys wallet, then the bennies accruing to the wealthy won't be an issue for most. Most realize that since the bulk of taxes are paid by the wealthy (because they have the money to tax) then any tax cut would naturally benefit those wealthy payers. It isn't that that would sink the tax bill...what would do that is if the wealthy benefit, but there is no meaningful benefit to everyone else.

But trying to draw up a tax plan when wealth is so skewed towards one group is practically impossible. When the wealthy own and control so much of the available wealth, of course the lion's share of the social burdens normally financed by taxes is going to fall squarely on THEM. This is not 'unfairness', it is math. If you give them a big tax cut, but everyone else only gets scraps, then even MORE of the burden will be on them.

Now, they don't WANT it. That much is apparent. Yet, those social burdens must be paid for, or else the whole system collapses. And since those wealthy have gotten all their wealth THROUGH that system, you don't need a MENSA IQ to predict what happens to those fortunes when the system fails. So it behooves those wealthy to either bite the bullet and do what needs to be done, or accept the loss of their fortunes to systemic failure.

Remember, the poor will not suffer as the wealthy will. They are already poor, already used to a hard, unrewarding life with no prospects. So they will be fine, after a few minor adjustments. Nothing much will change for them, after all.

But the wealthy would see their whole world up-ended. And not being used to deprivations, their suffering will be epic. They would find themselves suddenly powerless in a world they do not understand, and cannot navigate, without the wealth that once shielded them from reality.

It's the one with the most to lose that has to make the first meaningful move. Because nobody else gives a shit, no one will be 'going to the mattresses' to protect your stuff.

I have said before that I believe this time the big targets will be those in the wealthier classes. Not quite tippy-top 1%, but all the 'landed gentry' just below them, all your minor lordlings and such...they will be the next juicy target. TPTB have run through all the grabbable wealth of the lower classes, and they are picked clean. There is only one direction to go, and that is up, up through the licensed professionals, middle management, lower-tier politicos, the small business owners, and on up to the lessor entrepreneurs, smaller venture capitalists and investors, until they're finally banging on the doors of upper management and the larger owners.

But TPTB need money to make their dreams come true, and they mean to get it from someone. So if you have any, be alert. Don't think that because you are in a group that has not been traditionally at risk, this time IS different in some ways.

In reply to by troubadourcapital

mkkby 847328_3527 Sat, 12/30/2017 - 16:45 Permalink

Golmanites rule the world and win again.  If you can't beat em, join em.  I have GS bonds that pay 6%.  Those pricks are working for me and sending me my cut.

As for the tax cuts, of course the rich get a bigger cut.  They also pay the vast majority of the taxes.  Only Bernie commies think poor people who pay very little/nothing should be given more of our *charity* at gun point.

As for the increased deficit, I'm not happy about that but it will not AND CANNOT ever be paid.  Therefore it is free.  So we should milk it for all it's worth.  Someday the chinks and japs holding those notes will be wiped out.  Math must happen eventually.

In reply to by 847328_3527

ReturnOfDaMac mkkby Sat, 12/30/2017 - 23:23 Permalink

Now ya talin' mkkby!  If you can't beat the force, use the force to work for you.  Damn simple algorithm. Welcome to the dark side and glad you sorted it out.  The sheep will be sheared no matter what, so you may as well profit from it.  The tards actually cheer as your agents rape them, that's the beauty of it.

Happy, Healthy and prosperous 2018 to you and yours!

In reply to by mkkby

earleflorida NeoClassicist Sat, 12/30/2017 - 11:30 Permalink

http:www.zionismbook.com/   by Alan Hart  (3 Vol.s)

The 'Zionist' are the worst thing that ever happened for 'Jewry'!

Zionist represent ~5% of the entire worlds jewish population, and yet like the '1%' here in USSA their inverse is a sad telltale!... of where global`society is heading as 'orwell's' 1984 was acutely aware.

sometimes I think the Zionist and 1% use the '1984' novel as their manifesto!!!

In reply to by NeoClassicist

dgc0101 Honest Sam Sat, 12/30/2017 - 11:27 Permalink

Hey!

 

You did notice that GS wasn't the only firm doing this? Most of those other companies' executives are NOT Jews. But they will take advantage of the new tax laws, as will the vast majority of the rest of America. Just because you don't think getting a real job instead of part-time crap work with higher take home pay is not a good start is a statement of not just your bullsh*t antisemitism but also a reflection of how little a-holes like you give a damn about anything but your own spewing bile. Most people are too busy working to support their families to have the time to post responses to ingrates like you; they damn well are going to be quite happy to see the changes that occur, and not necessarily by punishing other people to get there.

In reply to by Honest Sam

dgc0101 Honest Sam Sat, 12/30/2017 - 11:34 Permalink

Hey!

 

You did notice that GS wasn't the only firm doing this? Most of those other companies' executives are NOT Jews. But they will take advantage of the new tax laws, as will the vast majority of the rest of America. Just because you don't think getting a real job instead of part-time crap work with higher take home pay is not a good start is a statement of not just your bullsh*t antisemitism but also a reflection of how little a-holes like you give a damn about anything but your own spewing bile. Most people are too busy working to support their families to have the time to post responses to ingrates like you; they damn well are going to be quite happy to see the changes that occur, and not necessarily by punishing other people to get there.

In reply to by Honest Sam

Endgame Napoleon dgc0101 Sat, 12/30/2017 - 12:59 Permalink

Most of the so-called “real jobs” are taken by parents—parents who hire and retain almost all fellow parents in jobs “voted best for moms.”

They watch each other’s backs while enjoying lenient-cubed absenteeism: whole mornings, whole afternoons, whole days and whole weeks of excused absenteeism beyond PTO and multiple pregnancy leaves.

These parents are never fired unless they are absentee all day / every day in a management job, and even then, they are indulged in this protracted absenteeism for years.

Most of the people retained in these so-called real jobs do not meet quotas. But crony-parent managers churn the people who come to work every day, stay all day and meet the sales generation and account-retention numbers every month. Managers use the non culture fits — the non parents in many cases — to get their numbers up so that they will get their bonuses and then churn them, hiring new chumps.

They keep the fellow babyvacationers. They keep the people who show up at the Family Day picnic and squeal with glee during the baby-mommy-look-alike-bulletin board-decorating contest at work.

None — or almost none — of the “real jobs” pay enough to cover rent that absorbs more than half of your earned-only income. Mostly, it is just a handful of management jobs that pay a decent amount. Is that what you mean by “real jobs,” the jobs held by managers? Those are almost always parents—well-vacationed parents in most cases.

The people with low-wage jobs are back at work, especially the ones without kids to fetch them wage-boosting monthly welfare, child tax credits up to $6,444 and womb-based absenteeism privileges, i.e. extreme leniency in skipping out on work.

The less unearned income you have to reward sex and reproduction, the less safe your job is, so you cannot be absentee, not that everyday attendance or even every-month quota meeting will save your job from crony, absentee-mom gangs. 

Maybe, you mean the “real job” longevity gained through womb loyalty, apart from pay that is usually insufficient to cover rent. Moms have tenure in all jobs; they cannot be fired in the many parent-gang jobs. 

They cannot he fired, regardless of the amount of absenteeism, because they have children to feed, even though moms are the only group that has access to layers of welfare that covers food and all other major living expenses, in addition to refundable child tax credits up to $6,444.

Parents do not have to feed their kids; government does it when they cannot to the tune of $450 per month on average in just free EBT food. Not so for the non-womb-productive citizens, but government pays the major household bills of immigrants with US-born kids whose traceable income from a male breadwinner falls below the earned-income limit for welfare, likewise giving them child tax credits up to $6,444.

Many of the few Americans with “real jobs” that pay a decent salary are still enjoying the post-Christmas babyvacation for busy-working parents, which will be followed by the New Year’s refresher vacation for busy-working parents and, for the government employees who are usually married to other high earners, the MLK educate-the-babies-about-identity-politics days off for busy-working families.  

In the low-paying private sector, managers keep the employees with spousal income, child support that covers rent or welfare and child tax credits. For the vast majority of positions, they retain the people who have unearned income for womb productivity that enables them to accept low pay, whether that is unearned income from spouses, ex spouses or welfare and refundable child-tax-credit welfare.

People reference the EITC for childless enoloyees, which is so small it does count that it. At just a few hundred dollars, it does not compare to a $6,444 tax-welfare check given to parents on top of other freebies. Citizen and non-citizen parents get a refundable, tax-time welfare check that equals wages from 3 to 4 months of full-time work in many jobs. It may climb higher with this tax cut, with a max of $12,888 that is more than half the yearly wages in many jobs in the many states with per capita income between $18k and $20k.  

Texas — per capita income — $19,617

 

https://en.m.wikipedia.org/wiki/List_of_Texas_locations_by_per_capita_i…

 

Kentucky — per capita income — $18,093

 

https://en.m.wikipedia.org/wiki/List_of_Kentucky_locations_by_per_capit…

 

Tennessee — per capita income — $19,393

 

https://en.m.wikipedia.org/wiki/List_of_Tennessee_locations_by_per_capi…

 

Alabama — per capita income — $18,189

 

https://en.m.wikipedia.org/wiki/List_of_Alabama_locations_by_per_capita…

 

Mississippi — per capita income — $20,670 

 

https://en.m.wikipedia.org/wiki/List_of_Mississippi_locations_by_per_ca…

 

South Carolina — per capita income — $18,795

 

https://en.m.wikipedia.org/wiki/List_of_South_Carolina_locations_by_per…

 

And employers know it; they know that childless workers often do not have “somethin’ comin’ in” from government to cover their main bills in jobs with payscakes so low that people can only cover a few bills. 

There are a few mostly youth-staffed jobs, here and there, but most of the “real” office jobs are mom-dominated. The manager moms are paid a lot for frequent backvacationing, bullying out the frequently churned non-culture fits who keep their sales generation and account-retention numbers up so that they can cash their bonus checks and spend them on mom-pampering goodies for kids and planning Halloween Dress-Up Days and Adult Cubicle Easter Egg Hunts for their 98% mom-dominated staffs between back-watching babyvacations.

Ahhh real jobs....

 

 

In reply to by dgc0101

dgc0101 Endgame Napoleon Sun, 12/31/2017 - 08:23 Permalink

Or perhaps you are a just an entitled millennial who thinks he or she should have been making 6 figures as a senior manager just after taking 6 years to complete an overpriced and useless, non-STEM degree? Oh, the horrors of having to actually work your way up the ladder of success! I can also guarantee that accomplishing real things works far better than posting long winded excuses on ZH that blame everyone except yourself for not going too far on that ladder!

It's truly a pity that you are so embittered to not know the difference between REAL job creation, private investment and the reduction of burdensome regulation versus the temporary and debilitating consequences of massive government intervention in the economy. It's not like history hasn't provided us with examples to show which way is better for individual, free people to prosper. Perhaps the past 8 years was enough to make you give up? But people like me are planning on spending less time here reading rehashed nonsense and instead causing economic activity to explode. I am sure that you'll still be spending your time complaining well into the future though.

In reply to by Endgame Napoleon

Endgame Napoleon Honest Sam Sat, 12/30/2017 - 12:00 Permalink

....and praised to high Heaven by Paul Ryan, an Irish Catholic who likes the tax cut for the rich, Swampians @ 175k and the tax welfare for illegal alien parents, but who did not like the other abandoned goals that won Trump the election. You know, the end to offshoring of jobs to foreign countries and the end to mass-scale, wage-cutting, illegal immigration, buttressed by layers of refundable child tax credits up to $6,444 and monthly welfare, gained by submitting traceable income from part-time work that falls below the earned-income limit for welfare and US-born kids’ SS cards. Catholic Ryan is all for that, even though it undercuts Deplorable citizens who often cannot use productive wombs to get free food and free rent from government and must live on earned-only income, driven lower by so much competition from welfare-supported immigrants. Onward to the Deplorable-betraying DACA amnesty, which will see a diversity of widespread support in the Swamp. All religions and races of Swampians will join hands to ***** the Deplorables.

In reply to by Honest Sam

all-priced-in Honest Sam Sat, 12/30/2017 - 13:39 Permalink

There is a little more to the story - I suspect anyway.

 

Goldman uses accrual based accounting for tax reporting --

 

They booked the bonus expense in 2017 and will deduct it off of their taxable income for 2017.

 

The employees getting the bonus are most likely on a cash basis for income tax reporting -

 

The bonus will be actually paid (direct deposit made / check issued whatever) in 2018 - so the employee will not count this bonus as income until the file their tax return for 2018.

 

So they will be able to take advantage of the .37% top rate. Everyone wins.

 

 

In reply to by Honest Sam