Back in July, we were the first to point out a clause in Goldman's contracts that allowed it to reverse its 2009 salary increases after 24 months.
Subsequently, it emerged that Goldman had indeed cut compensation for VPs and MDs, although we understood this was only by around 17% . Now we're hearing that the cuts have been far more significant - at VP level, at least.
"We met a Goldman VP who was on 475k. His basic is being reduced to about 300k p.a," alleges one markets headhunter. Another claims that around 100 Goldman VPs across sales, trading and operations in London have had their salaries reduced 40% in recent weeks.
Goldman didn't immediately respond to a request for comment, but headhunters claim a pay reduction has been expected as the clause negating 2009's salary rises is activated.
At first sight, compensation for VPs at Goldman is significantly higher than at other banks. VP salary brackets at GS are said to range from around 170k to 400k plus. At rival banks, VPs are paid a maximum of around 140k. Most banks increased VPs salaries from around 90k to their current levels in 2009.
However, headhunters point out that comparisons between salaries for VPs at Goldman and elsewhere are invalid because Goldman's VPs tend to be a lot more experienced than at rival banks.
"VPs at Goldman are the same as EDs and directors at other banks," says one. "Goldman calls anyone a VP if they like them and they're producing money."
Even after the cuts in their pay, Goldman's VPs may have higher salaries than rivals:
EDs and directors at most other banks are on salaries of up to 200k.