Morning Coffee: Goldman Sachs accused of using clichés to justify enormous pay. Private equity jobs face disappearance

Goldman Sachs pays well, but some people there receive more than others. In 2024, Goldman's median global pay was $163k, according to its recent proxy statement. Its mean global pay was $359k. In the UK, the average Goldman employee got $764k for last year.

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Even Goldman's high paid London bankers and traders are, however, left in the dust when their compensation is compared to Goldman's highest paid executives. David Solomon and John Waldron, its CEO and COO, received compensation of $39m and $38m respectively for 2024, plus $80m each in stock awards which vest all at once in 2030.

Goldman's wild largesse to its two favourite people has not gone unnoticed. Advisory firm Glass Lewis is advising Goldman Sachs shareholders that they ought to kick up a fuss. The Financial Times notes that Glass Lewis thinks the $80m share awards in particular are "egregious." They're not even linked to performance conditions. 

Worse, Goldman doesn't really justify why Solomon and Waldron merit such huge retention packages. Glass Lewis says Goldman uses "boilerplate language", effectively tired clichés, to justify paying the two top men so much.

What are these clichés? When the $80m awards were announced, Goldman said they were intended to "ensure stability and continuity in our senior leadership," and that it's important that "longer-term opportunities remain aspirational for our senior talent in the context of an increasingly diverse competitive landscape." Solomon was further praised for the firm's financial performance and his strategic leadership. 

As has been noted before, there might be more to it. Waldron was reportedly offered $500m to join Apollo and needed an incentive to stay. Maybe Goldman thought Apollo would choose Solomon instead?

Either way, investors could now vote against the pay awards at Goldman's annual general meeting in Dallas on April 23rd. If they do, Goldman can still pay the $80m, but it will leave a bad smell. JPMorgan faced a similar revolt over Jamie Dimon's pay in 2022 when only 31% of JPMorgan investors agreed with a one-off $50m pay award paid to the CEO. JPMorgan paid it anyway, but promised not to do it again. 

The implication is that you can get away with paying nearly $100m because of the "war for talent" as long as you only do it once in a while. 

Separately, junior bankers who want to work in private equity may be out of luck. The Wall Street Journal says this is a critical year for private equity jobs. - The private equity industry has been in a funk for four years and if new funds can't be raised, people will have to be let go. 

This doesn't mean that private equity hiring has ground to a halt. There's still demand, but not for standard banking juniors. The appetite in private equity is for senior people and for experts in secondaries, infrastructure, private credit and fundraising, says the WSJ. People who can raise money from wealthy individuals are a source of particular partiality.

Junior bankers who do manage to get private equity jobs now may not get paid nearly as much as their predecessors. With funds' struggling to exit investments, the promised carried interest is no more than "Monopoly money" says the WSJ. 

The implication is that the war for talent between banks and private equity firms is dissipating. Junior banker, at least, may not get paid to stay in the future. 

Meanwhile...

Pity the UK high earners who are not rich yet (Henrys). When national insurance and student-loan repayment—which act like a tax—are included, a young high-flyer can face a 71% rate.(Economist) 

Matthew Ponsonby, BNP Paribas' UK head of banking, has resigned. (Reuters) 

What's the difference between Citadel and Millennium? Citadel has a big commodities team. Millennium does not. (Rupak Ghose) 

Mitesh Parikh, Schonfeld's co-head of discretionary macro and fixed income, stopped trading at the end of 2024 and is going into business development instead. (Business Insider) 

Last Thursday, CoreWeave, a US data centre operator and the year’s biggest tech IPO sharply downsized what would have been a $32bn listing to $23bn and cut the amount of money it planned to raise in half to $1.5bn. The problem is partly that it's dependent on two customers -  Microsoft and OpenAI, and one chip supplier, Nvidia. It's signed-up customers for contracts that last several years. After that, it's not clear what will happen. (FT) 

Charlie Javice and Olivier Amar, Frank’s former chief growth officer were convicted on counts including conspiracy, bank fraud and wire fraud charges for defrauding JPMorgan and are each punishable by up to 30 years in prison. (Financial Times) 

At least 10 people have recently left the crypto prime broker FalconX. (Coindesk)

The serious delinquency rate for loans that experienced modifications (meant to bring them current) has now exceeded 30%! For reference, the peak in subprime serious delinquency was 27% in the GFC. (YesIGiveaFig)

"I like to fart in front of people. You can tell if someone’s cool or not from their reaction." (Guardian) 

Jonathan Bloomer, the former chairman of international bank Morgan Stanley, who died last year when Mike Lynch's yacht sank, left an estate of £6,551,549. (Sun)

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