Comments on: An interesting metric at Goldman… http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/ Morningstar's guide to what's hiding in SEC filings Tue, 07 Feb 2012 21:51:20 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: volderkihl http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9799 volderkihl Sat, 24 Oct 2009 07:55:26 +0000 http://www.footnoted.com/?p=4326#comment-9799 Goldman is an ingenious parasitic enterprise that profits from the losses of others. This is one of the most predatory operations ever conceived. By definition, Goldman's profits come from buying an asset cheaper than it's really worth or selling an asset for more than it's really worth--that's what traders do! Investing in a loan shark is no different; it may be very profitable but you're not doing business with monks either. btw, net revenue is a very common metric used by broker-dealers... Goldman is an ingenious parasitic enterprise that profits from the losses of others. This is one of the most predatory operations ever conceived. By definition, Goldman’s profits come from buying an asset cheaper than it’s really worth or selling an asset for more than it’s really worth–that’s what traders do! Investing in a loan shark is no different; it may be very profitable but you’re not doing business with monks either.

btw, net revenue is a very common metric used by broker-dealers…

]]> By: Bob http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9785 Bob Thu, 22 Oct 2009 19:15:45 +0000 http://www.footnoted.com/?p=4326#comment-9785 Goldman utilizes numerous non-employee (1099) labor. In the past, they were never included in the headcount number. Now they are. Which lowers the amount per head artificially. Goldman utilizes numerous non-employee (1099) labor. In the past, they were never included in the headcount number. Now they are. Which lowers the amount per head artificially.

]]> By: Robert Mattei http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9732 Robert Mattei Sun, 18 Oct 2009 14:53:54 +0000 http://www.footnoted.com/?p=4326#comment-9732 What this says to me is that I won't invest in Goldman Sacks. I'm all for taking good care of you employees but I find it hard to believe that Goldman Sacks employees are so good they should earn a salary + 700k. Does anyone really believe that a company can make money long paying employees at that rate? What this says to me is that I won’t invest in Goldman Sacks. I’m all for taking good care of you employees but I find it hard to believe that Goldman Sacks employees are so good they should earn a salary + 700k.

Does anyone really believe that a company can make money long paying employees at that rate?

]]> By: Michelle Leder http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9718 Michelle Leder Fri, 16 Oct 2009 18:43:18 +0000 http://www.footnoted.com/?p=4326#comment-9718 @kk Not quite following your math here, but the math I cited actually came from the Times. They're the ones who calculated it at $700K per employee. @kk Not quite following your math here, but the math I cited actually came from the Times. They’re the ones who calculated it at $700K per employee.

]]> By: sometimesbullsometimesbear http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9717 sometimesbullsometimesbear Fri, 16 Oct 2009 18:25:42 +0000 http://www.footnoted.com/?p=4326#comment-9717 Envy is a very common human trait! Envy is a very common human trait!

]]> By: Bryan http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9716 Bryan Fri, 16 Oct 2009 17:50:27 +0000 http://www.footnoted.com/?p=4326#comment-9716 Even when you heard reports on comp at Morgan Stanley, JPMorgan and Merrill Lynch (mostly during last year's meltdown), Goldman seemingly lagged behind them. The NY AG has a good report on comp at banks (obviously lower at commercial banks): http://www.oag.state.ny.us/media_center/2009/july/pdfs/Bonus%20Report%20Final%207.30.09.pdf I think there are several explanations: * Goldman generates more revenue per employee. Whether that's due to more talented employees or the scale of its operations, compensation's not going to scale 1:1. * Different business mix. Lazard's more specialized, and -- while I don't know the extent of how shrinking M&A vs increased bankruptcies impacted them -- may have had to pay up to retain employees. In 2008-9, Merrill paid out $30.7b in comp despite <i>negative</i> $1.3b in revenue, so it wouldn't surprise me that firms are all over the board, with the more successful ones paying out a lower % of revenue. It's a metric that seems to be receiving more focus, and it's probably been pretty fair for Goldman's operations. For short-term stuff like trading, underwriting, M&A advisory, etc. on a largely fair-value balance sheet, employees' quarterly contributions probably tag closely to quarterly revenue, whereas net income would be much more volatile. For commercial banking operations -- the borrow-short-lend-long types -- the measure's probably not going to be as big a factor, as you would be compensating employees for investments that may have taken place 5-10 years ago and are still held on the balance sheet at face value. Even when you heard reports on comp at Morgan Stanley, JPMorgan and Merrill Lynch (mostly during last year’s meltdown), Goldman seemingly lagged behind them.

The NY AG has a good report on comp at banks (obviously lower at commercial banks):
http://www.oag.state.ny.us/media_center/2009/july/pdfs/Bonus%20Report%20Final%207.30.09.pdf

I think there are several explanations:
* Goldman generates more revenue per employee. Whether that’s due to more talented employees or the scale of its operations, compensation’s not going to scale 1:1.
* Different business mix. Lazard’s more specialized, and — while I don’t know the extent of how shrinking M&A vs increased bankruptcies impacted them — may have had to pay up to retain employees. In 2008-9, Merrill paid out $30.7b in comp despite negative $1.3b in revenue, so it wouldn’t surprise me that firms are all over the board, with the more successful ones paying out a lower % of revenue.

It’s a metric that seems to be receiving more focus, and it’s probably been pretty fair for Goldman’s operations. For short-term stuff like trading, underwriting, M&A advisory, etc. on a largely fair-value balance sheet, employees’ quarterly contributions probably tag closely to quarterly revenue, whereas net income would be much more volatile. For commercial banking operations — the borrow-short-lend-long types — the measure’s probably not going to be as big a factor, as you would be compensating employees for investments that may have taken place 5-10 years ago and are still held on the balance sheet at face value.

]]> By: kk http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9715 kk Fri, 16 Oct 2009 17:43:23 +0000 http://www.footnoted.com/?p=4326#comment-9715 Did u do a right math? $5.35 b should be the finAL estimates for the end of the yr. Let 's give it a 20% raise. it is about 300k per head, i think. still high, but not as high as what u said. Did u do a right math?
$5.35 b should be the finAL estimates for the end of the yr. Let ‘s give it a 20% raise. it is about 300k per head, i think. still high, but not as high as what u said.

]]> By: Frank Graham http://www.footnoted.com/my-big-fat-deal/an-interesting-metric-at-goldman/comment-page-1/#comment-9713 Frank Graham Fri, 16 Oct 2009 15:15:24 +0000 http://www.footnoted.com/?p=4326#comment-9713 hmm From Reuters today. Historic pay package lives on. Lazard CEO Bruce Wasserstein, who died this week, was notorious for his blockbuster hostile takeovers. Now, he is achieving fresh notoriety for the enormous pay he commanded. Some 4.4M restricted stock units he held – worth $188M at today's prices – will be vested due to his death. The payout makes the legendary CEO one of history's most richly compensated investment bankers, at a time when Wall Street chieftains are under fire for taking outsized pay packages. Wasserstein's 2008 pay package was worth $20.4 million, most of it in restricted stock. ... while Goldman plays it down. As the Wall Street bonus controversy blazes on, Goldman plunked a smaller chunk of revenue into its compensation pool. But employees need not cinch their belts: they are still on track to pocket an average of $630,000 each – rivaling record bonuses in 2007. Goldman has already set aside some $16.7B for bonuses this year, and looks headed toward the $20B mark. The firm may be hoping its recent show of austerity will quiet critics, but numbers like these make that unlikely. hmm From Reuters today.

Historic pay package lives on. Lazard CEO Bruce Wasserstein, who died this week, was notorious for his blockbuster hostile takeovers. Now, he is achieving fresh notoriety for the enormous pay he commanded. Some 4.4M restricted stock units he held – worth $188M at today’s prices – will be vested due to his death. The payout makes the legendary CEO one of history’s most richly compensated investment bankers, at a time when Wall Street chieftains are under fire for taking outsized pay packages. Wasserstein’s 2008 pay package was worth $20.4 million, most of it in restricted stock.
… while Goldman plays it down. As the Wall Street bonus controversy blazes on, Goldman plunked a smaller chunk of revenue into its compensation pool. But employees need not cinch their belts: they are still on track to pocket an average of $630,000 each – rivaling record bonuses in 2007. Goldman has already set aside some $16.7B for bonuses this year, and looks headed toward the $20B mark. The firm may be hoping its recent show of austerity will quiet critics, but numbers like these make that unlikely.

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