Colin Barr

Following the money in banking, economics, and Washington

Goldman's shrinking bonus pool

April 19, 2011: 9:23 AM ET

Here's a tear-jerker: Goldman Sachs' better-than-expected first quarter won't mean a bigger bonus pool.

Goldman's (GS) per capita compensation expense fell 11% from a year ago in the quarter ended March 31, even as the firm's revenue and profits handily beat analysts' expectations. Scrimping on pay isn't exactly what Wall Street is known for, as the raises being handed out at J.P. Morganattest. So what gives?

Making do with less

The answer is that Goldman's revenue, which is the main driver of bonus pool size, declined 7% from a year ago. Meanwhile employment increased by the same amount, leaving each worker a smaller share of a smaller pie.

This is not a call to weep for starving investment bankers, mind you. Average compensation was still $147,825 in the first quarter, which is more than double the annual median family income in Goldman's home state of New York.

But if Goldman matches Wall Street's 2011 revenue estimate of around $38.5 billion and pays out the same proportion of revenue to workers as it did last year -- 39% -- its bonus pool will shrink for the third straight year, to $423,000.

If that's not exactly cause for celebration, at least it's one trend that's going in the right direction.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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