Goldman Sachs and JPMorgan Chase, Wall Street’s top investment banks, this week briefed employees on bump bonuses for 2021, after a record year for transactions on Wall Street.
Goldman Sachs increased its annual bonus pool for top-performing investment bankers by 40% to 50%, people with direct knowledge of the matter said.
JPMorgan Chase, the largest US bank, increased its annual bonus pool for top-performing investment bankers by 30% to 40%, sources with direct knowledge of the matter said.
|GS||THE GOLDMAN SACHS GROUP INC.||343.91||-4.19||-1.20%|
|JPM||JPMORGAN CHASE & Co.||145.08||-2.58||-1.75%|
Goldman Sachs and JPMorgan declined to comment.
Record levels of deals and trading activity have fueled investment bank profits this year as stimulus measures helped propel global stock markets to all-time highs.
Top performers in M&A advisory and equity capital markets enjoyed some of the biggest bonuses at both Goldman and JPMorgan, the people said.
Bankers in Goldman’s M&A advisory and ECM departments were handed an average 40% increase in bonuses, with top performers seeing increases of 50% or more.
GOLDMAN SACHS EARNINGS DOWN 13% IN THE FOURTH QUARTER
The bank’s partners were given special stock awards, some amounting to multimillion-dollar packages, the sources said. Bankers who worked on some of the year’s biggest deals were among those who received the most generous awards, one of the sources said.
Wall Street’s biggest banks face crushing competition to hire, paying more to attract and retain top talent. But that comes at a price.
In the most recent quarter, noninterest spending rose tens of billions of dollars at the country’s largest banks, hurting earnings growth, earnings data showed.
Talent retention costs dampened record 2021 earnings at both Goldman and JPMorgan.
JPMorgan Chase reported last week that its noninterest expenses rose 11% in the fourth quarter of last year, mostly due to higher employee compensation. Goldman reported a 33% increase in compensation costs over the past year.
JPMORGAN FOURTH QUARTER EARNINGS DOWN 14%
JPMorgan CEO Jamie Dimon said the bank will pay what it takes to retain the bank’s top talent.
“We’re going to be competitive and we’re going to pay, and if that eats up a little bit of margin for shareholders, so be it,” he told analysts.
Top Goldman Sachs executives repeated those statements on Tuesday.
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“Our philosophy remains to pay for performance and we are committed to rewarding top talent in a competitive work environment,” Chief Financial Officer Denis Coleman told analysts.
Morgan Stanley increased its annual bonus for top executives by more than 20%, Reuters reported last week.