WITH all the hype recently about Goldman Sachs being the only major investment bank to avoid being stung in last year’s subprime mortgage fiasco and the record profits it rung up last year – with the record $67.9 million bonus it paid to CEO Lloyd Blankfein – one would expect that bonus season at 85 Broad Street would be a happy time.
Except for the portfolio manglers at Goldman’s imploded Global alpha fund, that is.
After all, didn’t the firm set aside $20.2 billion to pay employee wages, benefits and bonuses this year, a 23 percent increase from last year? That comes to about $600,000 per employee, on average.
So we were as surprised as anyone last week when we heard the whispers that some cost center employees – the back office operations, IT folks and such – at Goldman were getting stiffed.
“I’ve been hearing it from inside that bonuses for cost center workers were crushed,” said one source. “People that expected 75 percent of their salary as a bonus, based on what they got last year, only got 15 percent his year.”
Most were expecting at least the same size bonus as last year.
Those at the top were certainly taken care of.
Co-Presidents Gary Cohn, 47, and Jon Winkelried, 48, each received bonuses of about $40.5 million, up 58 percent from last year.
Last year, Brooklyn-born Blankfein, 53, took home a bonus of $53.5 million, according to the company’s filing with the Securities and Exchange Commission. Andrew Barber
Bad company
Sony BMG posted the biggest market share decline of any of the major record label groups in a dreadful 2007 for the stumbling music business.
The music giant, a joint venture between Sony Corp. and Bertelsmann, saw its market share fall to 24.9 percent from 27.7 in 2006, according to Nielsen SoundScan.
Industry insiders are saying that if the company continues to struggle and perform poorer than the stumbling music business, look for Sony and Bertelsmann to start re-evaluating their long-term interests in the venture sooner rather than later. Brian Garrity
TIC’d off
Months of nail biting is coming to an end for a group of nearly three dozen mom-and-pop investors who plowed their life savings into an Arizona real estate deal that quickly went south.
The investors – which included a retired Brooklyn seamstress, a 78-year-old cleaning lady who’s had to go back to work, and a couple who sold their cafe and got in on the deal – each put about $850,000 into the “tenant-in-common” investment, expecting to get monthly checks for $5,000 that would fund their retirements.
But after receiving a couple of checks, the payments abruptly stopped about 14 months ago.
The investors soon learned that Le-Nature’s, the tenant in the $100 million Arizona bottling plant they had bought into, went bust and could no longer pay the rent.
With the property managers unable to find another tenant, foreclosure loomed, an event that would have wiped out every penny of the $30 million the investors put into the deal.
Facing investor ire and the potential for bad publicity, the deal’s sponsor, CB Richard Ellis Investors, is offering to buy out the investors for 60 cents on the dollar.
Though disgruntled, virtually all of them are opting to accept the deal, figuring that it’s not worth suing and risking losing everything.
The busted deal highlights the risk of investing in “TIC” investments, which let as many as 35 investors buy a fractional share of property for an expected monthly return of around 7 percent to 10 percent. Janet Whitman