Thursday, January 17, 2013

Would you Believe: Goldman Agonized Over Pay Cuts For Two Years

Top execs at Goldman Sachs have been considering deep cuts to staffing levels and pay for at least two years, but feared too many layoffs would leave the firm unprepared for an eventual pickup in business, people familiar with the bank told BI.

They instead chipped away at staff levels and focused on non-personnel expenses that are less painful to cut.  But investors pressured the bank to cut costs further, the sources said, and on Wednesday, Goldman gave in.  The largest standalone investment bank said in the fourth quarter it cut the percentage of revenues it pays to employees in half to 21 percent. That brings the ratio for the entire year to its second-lowest level since the bank went public in 1999.

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