Goldman Sachs needs to pay as much as hedge funds, says CEO David Solomon
Hedge funds and alternative asset management firms like to hire from Goldman Sachs. Citadel and Millennium are fans of Goldman staff. Eisler Capital is run by ex-Goldmanites. Funds really like to hire Goldman's traders. They also like to hire Goldman's technology staff.
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If they like you, and you have a proven record of profitability, hedge funds can pay very well. Point72, for example, reportedly paid $50m to hire Marshall Wace portfolio manager Kevin Liu last month. Millennium has reputedly paid $60m+ for PMs in the past. Citadel appears to pay its merely average employee over $2.5m a year.
Speaking today at the UBS Financial Services Conference, Goldman Sachs CEO David Solomon said Goldman needs to be able to compete with all this. If Goldman Sachs people are anything, they are "extraordinary" said Solomon, repeating this many times over. "We have extraordinary talent," he declared. Goldman has an "extraordinary group of people." It's an "extraordinarily talented organisation."
Such is the unusualness of Goldman's talent, that Solomon said everyone wants to hire it. He said interest in Goldman staff is particularly "intense" from the "alternatives space." We presume this means hedge funds, but it might also mean private credit funds, or Gregg Lemkau at BDT & MSD Partners, who keeps hiring all his old Goldman Sachs colleagues.
If it's to stem the flow of the extraordinary people out the door, Solomon said Goldman also needs to pay well. The firm must "pay for performance", he stressed. If you perform over a period of time, Solomon said you need to be able to earn as much at Goldman as you could doing other things.
This explains why Goldman has been known to pay $30m bonuses of its own, and why it's giving senior employees more opportunity to invest in Goldman funds through its special investment program. Solomon himself has received $65m from these funds in the past five years, plus almost the same again in salary and bonuses. Goldman presumably needs to ensure he doesn't join a hedge fund too.
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