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Back in early 2020, Goldman Sachs said it would stop using its fourth-quarter results to iron out its compensation ratio. Three years later, it appears the firm’s attempt to provide investors with a more predictable idea of staff costs has gone awry. On Tuesday, Goldman reported results showing its highest fourth-quarter compensation ratio in more than a decade, at 35.5%, as employee costs hit $3.76 billion. That’s the most the New York-based company has ever set aside for staff pay in the final quarter of its fiscal year. The latest figure compares with 25.7% in 2021 and 21.1% the year before. The compensation ratio was last higher in the fourth quarter of 2011, when it reached 36.5%, according to data compiled by Bloomberg. Staff compensation costs, meanwhile, beat the previous fourth-quarter record of $3.27 billion, set in 2007. In January 2020, Stephen Scherr, then Goldman’s chief financial officer, said the bank would report its compensation “more on a straight line without relying or waiting on the fourth quarter, so as to be a bigger adjustment.” The revamped approach appears to have done little to please investors: Goldman shares slumped Tuesday morning after the bank reported an increase in expenses.
— Harry Wilson and Sridhar Natarajan, Bloomberg News, with assistance from Keith Gerstein
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