Top bankers at Goldman Sachs and JPMorgan received bonuses of up to $15 million this week after last year’s wave of deals – and investors aren’t happy.
Bank stocks fell sharply even with the bumper year of mergers and stock offerings after reporting significantly higher spending – largely on the back of the big paychecks they hand out in a tight labor market.
The bonus pool for investment bankers jumped more than 30% among big banks from a year ago, leading to a series of eight-figure pay packages for top traders, analysts say of the sector.
With top performers carrying $15 million and high-performing general managers on the next rung earning up to $7 million each, people familiar with the matter told On the Money. And even some mid-level positions at Goldman — like vice presidents — have earned north of $1 million in bonuses, these people said.
Even as investors back down, banks insist earnings as a percentage of revenue have remained constant. Investment banking revenue rose 58% at Goldman and 39% at JPM from a year ago.
“When you’re in a business that basically doubles profits, paying 30-40% more bonuses isn’t a big deal,” a bank insider told On the Money.
The banks don’t disclose how big each employee’s bonus is – and insiders are quick to notice that each person receives a different reward depending on the market for a given job and the person’s performance. “You have to do the math for each person individually,” a source told the Post.
Along with the multimillion-dollar bonuses, Goldman Sachs partners got even more: an extra payout that could add millions of dollars to their take-home pay, report says, though the amount of the extra bonuses isn’t clear .
“The partners are pretty happy – people have been working really, really hard, so they’re happy Goldman paid,” a source close to Goldman told The Post.
Both Goldman Sachs and JPMorgan declined to comment.
The deal boom has boosted investment banking revenues, but has also led to major burnout among analysts and associates, with big banks raising base pay – in some cases multiple times – this year to compete for the workers.
Goldman shares fell earlier this week after the elite bank said it spent 31% more on compensation this year than last. Its stock is down more than 10% this week compared to the broader market’s 5.6% decline. Meanwhile, JPMorgan also reported higher operating costs. Its stock fell 9.8%.