Goldman doles out record pay - 40% surge

Investment bank doles out 40% surge in compensation totaling record-high $16.4 billion.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Goldman Sachs is handing out big, fat holiday gifts to its employees this year, with an average 25 percent hike in pay per employee, resulting in a record-high compensation package.

Goldman's (down $0.35 to $199.65, Charts) $16.4 billion total compensation package was mentioned as part of this week's fourth-quarter report, in which the firm disclosed a surge in quarterly profit. The package will be divvied among 26,467 employees, resulting in an average annual compensation, with pay and benefits, of $621,906 per worker.

This doesn't necessarily mean that the company's chief executive, Lloyd Blankfein, will be expected to survive on a few hundred grand, nor does it mean that assistants will be driving Ferraris. The compensation and bonuses are not allocated in an egalitarian fashion, but are staggered in order of earning importance.

Goldman Sachs spokesman Peter Rose said the compensation was the highest ever for the company, though he did not say how much of the $16.4 billion is from bonuses and how much is from straight salary. Rose said that bonuses, which are a key part of the compensation structure at the investment firm, are handled person-to-person based on individual performance.

The total compensation is up 40 percent from 2005, according to company filings. With a 12 percent increase in employee head count, per-employee compensation is up 25 percent.

Blankfein - as well as another 20 or 30 top-level execs - could end up with more than $25 million, according to news reports. That's not bad, especially considering that Blankfein just recently took over; Henry Paulson left the top job in July to head the Treasury Department.

The compensation increase could bode well for luxury sales - think mansions in the Hamptons.

"What we see is what these guys are willing to spend on homes," said Pamela Liebman, chief executive of Corcoran Group, a real estate firm that handles luxury properties in New York City and the Hamptons, among other pricey locations. "When someone calls us and says that they want an oceanfront home in the Hamptons and they're willing to spend $50 million, we assume those bonuses are pretty big."

Liebman said her firm has already received these calls, and her agents will be taking a couple of Goldman hotshots out to the Hamptons to look at mansions this weekend. She said the market for such homes is "extremely limited," with less than 15 oceanfront mansions on the market along the famous South Fork of Long Island beaches.

But the biggest compensation doesn't go to the CEOs. It goes to the top performers who deal in futures in oil and other hot commodities. News reports say that these top-level Goldman traders could reap packages of up to $100 million.

U.S. Treasury Secretary Paulson, by the way, won't be getting any bonus this year, because he left the big bucks behind when he went to work for the government. "[Paulson] receives no end of the year compensation," said Goldman Sachs spokesman Rose. "He's severed his ties with the company."

So how about the little guys?

"I don't think that they'll be driving a Ferrari, but I wouldn't be surprised to see him driving a Mercedes,"said Liebman, referring to lower-level employees. "[Goldman's] known to be very generous and they really spread the money around. Even if you're a newbie at the firm you'll be seeing a six-figure bonus, and many of them will see that as a stepping stone to more money."

Of course, Goldman execs aren't the only ones that made out. Lehman Bros. (up $0.25 to $76.92, Charts) chief executive Richard Fuld was granted 141,543 shares or restricted stock on Dec. 8. With a closing price of $77.03 a share on that day, that translates into a $10.9 million stock grant.

Happy holidays.

CNNMoney.com senior writer Chris Isidore assisted with this story.

An earlier version of this story erroneously characterized the $16.4 billion total compensation as a bonus. CNNMoney.com regrets the error.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.