Goldman Sachs Group is planning to boost bonuses for the trading division by up to 20%, people familiar with the matter said, after the business reclaimed its stature as the firm's golden goose.
The fatter paychecks come on the back of a 49% jump in revenue following a sluggish decade for a group that was once the envy of Wall Street. Corners of trading, particularly in fixed income, could expect much bigger payouts as executives try to prevent rainmakers from being lured into the arms of deep-pocketed buy-side firms run by the likes of Ken Griffin, Izzy Englander and Steven Cohen.
There will be greater divergence in payouts than in previous years, with some people potentially getting pay cuts despite generating more revenue, the people said, asking not to be identified because bonus policies aren't made public. Final numbers are still being ironed out and will depend on how well the firm avoids any setbacks in the final weeks.
Goldman's bonus decisions have been a touchy topic ever since the firm's success through the 2008 financial crisis drew public attention. But this year, banks all along Wall Street saw staggering gains, giving powerhouses more cover to share spoils. J.P. Morgan Chase is boosting bonuses for its sales and trading workers 15% to 20%, people familiar with those talks have said.
A representative for Goldman Sachs declined to comment.
Within the markets division, traders who navigated the wild price moves will pocket much bigger rewards than salespeople who tend client relationships. While many salespeople succeeded in bringing in more business, some of that was by virtue of holding a Goldman business card, one senior executive said.
Even still, the trading division will fare better than some insiders feared after a year in which Goldman pledged to cut costs and got slapped with penalties tied to Malaysia's 1MDB investment-fund scandal. That contributed to more than $3 billion in legal provisions, which have shaved more than 5 percentage points off the bank's return on equity.
Executives have pointed to their relative wins, such as claiming a greater share of business amid the turmoil when clients sought the reassurance of dealing with a large counterparty. Managers insist those gains will persist even after the strains of the coronavirus pandemic ease, with one executive saying no one will go back to flying a budget carrier after flying a flagship airline.