Goldman Sachs promises massive pay rises after strong first quarter

Thousands of UK staff at Goldman Sachs have been promised a 33% pay rise after the bank posted strong earnings for the first quarter of 2009.

Charles Cotton, reward adviser at the CIPD, told Personnel Today the bank’s approach to remuneration would be carefully watched by many parties as the scrutiny over bonuses and pay rises continues during the economic downturn.

The US-based bank revealed better-than-expected results in a quarterly report yesterday, but also disclosed that it had raised its bonus and pay pool for the first three months of 2009 by 17% – to just over £3bn.

At least 5,500 staff in the UK were told they would they would receive pay boost and or a bonus.

This is despite the G20 summit earlier this month, where Gordon Brown announced “new rules on pay and bonuses” in an attempt to tackle short-term reward and excessive risk-taking.

Cotton said: “There will certainly be a lot of scrutiny from politicians and regulators and media on how Goldman Sachs deals with bonuses. Organisations will have to make sure that they are clear and upfront about what they’re actually awarding, and whether it is done for retention or reward.”

A spokeswoman for the bank said it would be awarding any bonuses through shares with a long-term focus for senior staff, rather than cash.

“It’s always been the case that it is shares over cash, especially for those who are higher up,” she said. “Each quarter we accrue an amount for compensation, but we won’t decide on how much or what type of bonuses until the end of the year.”

The report revealed the staff compensation pot, from which salaries and bonuses are paid, rose by nearly one fifth in the first quarter to $4.71bn (£3.16bn) due to an increase in revenues. This figure also includes payroll, taxes and severance costs, which make up a significant portion, the spokeswoman said.

Last spring, the company axed around 4,000 workers from its global workforce of 32,000.

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