Sinking markets take a $1B bite out of Goldman bonuses

Goldman Sachs’ stock hit a 52-week low today, and it’d be understandable if new CEO David Solomon were reaching for an aspirin.

Ask a Wall Street pro how he responds when markets get slammed like in the past two days and he’d tell you he’s carefully monitoring his positions, which is a roundabout way of saying he’s quantifying the damage. We thought we’d do all the folks at Goldman a favor and calculate what the falling stock market means for their wallets.

The answer is, they’re out $1 billion, which sounds like serious money by any standard.

How did we arrive at that figure? Here’s the math:

In early 2014 Goldman paid employees bonuses in the form of $2.2 billion worth of shares. That was a sweet gift on top of whatever cash bonuses the bankers got, but the catch was that recipients could not sell any of their stock until January 2019. Of course, no one wanted to sell when the deferred-share bonuses soared in value. Goldman, in fact, was the best-performing member of the Dow Jones Industrial Average in the months after the 2016 election, as President Donald Trump began stocking his administration with lots of Goldman alumni. By this past March, the 2014 stock grant was worth nearly $4 billion.

But trade wars and rising interest rates aren’t good for global capital-markets leaders, and Goldman’s stock has fallen more than 20% from its peak. As a result, the 2014 bonus grant that vests in a few weeks is now worth a lot less—about $3 billion.

Source: Crain’s New York Business

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  1. October 12, 2018
  2. October 12, 2018

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