[Marxism] Goldman-Sachs bonuses

Louis Proyect lnp3 at panix.com
Tue Dec 12 14:01:22 MST 2006


(I used to work for these bastards in the late 1980s, but left after word 
got out that they were planning to get rid of all their more experienced 
and well-paid employees. They probably would have gotten rid of me first 
since I refused to work more than 35 hours per week and screwed up their 
commodities database in 1989--no I didn't do it on purpose. In good years, 
like this one, the bonus was about 20 percent of a year's employee for a 
lower-level employee like me. For investment bankers, it was usually equal 
to a year's salary and up. They used to call the bonus the "golden 
handcuff" at places like Goldman and Salomon Brothers, where I had also 
worked--even on a project for Michael Bloomberg. The golden handcuff meant 
that no matter how much you hated these joints, you stuck around for the 
money.)

NY Times, December 12, 2006
Goldman Reports Record Earnings for 2006
By JOHN HOLUSHA

The Goldman Sachs Group reported today that it earned $9.34 billion this 
year, the most in Wall Street history, and that it would set aside $16.5 
billion for salaries, bonuses and benefits for employees.

That figure works out to an average of $622,000 for each employee, although 
the payouts will be far from uniform: the investment bankers at Goldman who 
arrange mergers and acquisitions or sell corporate stock to investors will 
receive much more, and support staff and other kinds of employees much less.

In the company's fourth fiscal quarter, which ended Nov. 24, profits 
increased 93 percent over the year before, to $3.16 billion, or $6.59 a 
share, exceeding the forecasts of most analysts.

Most other major Wall Street investment banks will report their results 
later this week or next week, and analysts expect robust figures across the 
industry.

The bonuses at Goldman, the leading merger advisor in the industry, and 
elsewhere on Wall Street are expected to give the New York area's economy a 
substantial boost, particularly in sales of high-end residential real 
estate, luxury cars and other pricey goods. "When these guys learn what 
their bonuses are, we are among the first people they call," said Pamela 
Liebman, the chief executive of the Corcoran Group, a residential 
brokerage. "They call their mothers, and then their real estate brokers."

Ms. Liebman said that investment bankers "work hard and want to live well," 
and that they are usually interested in buying a luxury apartment in 
Manhattan or a second or third residence elsewhere.

She said her agency is already getting calls in advance of the bonus 
announcements this year, and that the interest is not limited to the top 
executives of Wall Street firms. "Even the junior guys want to spend their 
bonuses on residential real estate."

Two years ago, BMW of Manhattan opened a showroom at 67 Wall Street, so 
that investment bankers would not have to take the time to travel uptown to 
its main sales and service operation at 57th Street and 11th Avenue.

At the time, Jeffrey A. Falk, the president of the dealership, said the 
intention was to get physically closer to potential customers.

"This is part of a strategy we have been developing over the past two years 
to make it more convenient for our demographic."

Speaking today, he said there has been an increased level of what he called 
"pre-shopping" at the Wall Street showroom, based on anticipated bonuses.

"They are shopping now, and talking to salesmen based on what they think 
their bonus will be," Mr. Falk said. "Then in January and February, we'll 
get the orders."

Spouses and the high-end retailers that cater to them feel the effect of 
the bonus payment, said Faith H. Consolo, vice chair of Prudential Douglas 
Elliman, a commercial brokerage.

"The luxury market is very dramatically affected by bonuses," Ms. Consolo 
said. "We are talking furs, jewelry, apparel and beauty items like $250 
jars of face cream. Anything that makes them look good or feel good."

Luxury spas are likely to see an influx of business as well, she side, as 
executives use part of their bonuses to send their spouses on spa vacations.

2006 is the third consecutive year of record-breaking earnings for Goldman, 
which is the world's largest securities company as measured by the total 
market value of its stock. And the company appears positioned to continue 
growing in its crucial investment banking business.

The company said its backlog of merger and underwriting deals was larger at 
the end of November than it was at the end of August.

Rising stock prices generally, an active market in fee-generating business 
deals and gains on investments, many of them in Asia, are expected to make 
this year exceptionally profitable for many other Wall Street companies as 
well.

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