Footnotes, the fig leaves of finance, often reveal more than they hide. Today, the WSJ reveals that Goldman Sachs changed the way it counts, uh, noses at the highly profitable investment commercial bank so that bonuses per employee would appear to be 7.5% lower than they are in reality.
The story emerged after shareholders began complaining to Goldman that the firm wasn’t sharing its big gains with investors — who saw their stake in the firm diluted by 100 million shares during the crisis.
Some major Goldman shareholders also are concerned about a little-noticed change in the company’s financial statements that increased the firm’s total head count by adding temporary employees and consultants. The change reduced per-employee compensation, making it look like Goldman employees earn less than they actually do.
The figure is a lightning rod for criticism of Goldman because its staff is on pace to earn about $717,000 apiece for 2009. Excluding temporary employees and consultants would increase compensation per employee to about $775,000