Goldman Sachs, a bank once famous for its rich bonuses, is clamping down on pay.
The value of Goldman’s compensation and benefits for 2013 is the lowest it has been since 2009, measured as a proportion of net revenue, according to results released on Thursday. That figure peaked in 2011 and has now declined for two years.
Goldman has sought to bring down costs amid challenging markets and a punishing year for bond trading, zeroing in on compensation, its biggest expense by far. In the third quarter of last year, the bank cut sharply the amount of money it set aside for compensation, an unusual move for the Wall Street titan.
Goldman said on Thursday that it earned $8.04 billion last year, an 8 percent increase from the previous year. In a sign that cost-cutting is helping the firm make money, net revenue in 2013 was virtually flat at $34.2 billion.
Goldman is paying $12.61 billion in compensation and benefits for the year, 3 percent lower than in 2012. The ratio of compensation to net revenue - a widely used yardstick - is 36.9 percent for the year.
That figure was comfortably above 40 percent in the years before the financial crisis. Goldman’s compensation ratio was 43.9 percent in 2007 and 49.2 percent in 2008, amid a steep decline in revenue. (In 2008 and earlier, Goldman’s fiscal year ended in November.)
The ratio came down sharply in 2009, to 35.8 percent, before rising to 39.3 percent in 2010 and 42.4 percent in 2011. Since then, it has been on a path downward.
“Goldman is showing a discipline on compensation that no other bank is showing,†Brad Hintz, an analyst with Sanford Bernstein, told DealBook.
Still, investors greeted the latest results with trepidation. Goldman’s shares fell about 1.5 percent in morning trading on Thursday.
Morgan Stanley, a main rival, is scheduled to report its results on Friday.
