Goldman Sachs' pay for 2023 already looks a bit challenged
After a difficult first quarter, there are signs today Goldman Sachs is being circumspect with compensation for 2023.
Today's results show that compensation spending per head at Goldman was at its lowest level for three years, at $90.1k in Q1. If all things remain equal, this implies that Goldman Sachs will spend an average of $360k in compensation on each employee in 2023.
Goldman's compensation spending for Q1 2023 was only marginally lower than the $91k Goldman spent per person in the first quarter of 2022. However, the bank said today that the most recent quarter's compensation number included severance costs for the 3,100 people let go. The implication is that remaining staff could see a more significant reduction in their accrued pay.
As the chart above shows, the most vintage recent quarter for Goldman Sachs' pay was clearly Q1 2021, when accrued compensation soared to $150k per head for three months alone. This followed a 105% year-on-year increase in investment banking revenues and a 60% increase in market making revenues at the firm.
While compensation spending at Goldman was curtailed during the first quarter of 2023, spending on communications and technology rose 10%. Speaking today, Goldman Sachs CEO David Solomon said the firm is now "grinding down" the amount it spends on professional services (AKA) consulting fees after these rose 4% on the year.
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