Goldman Compensation Cost Still High

Goldman Sachs (GS) reported Q4 results and of course lost money. If they had shown black ink no one would have believed it. Take a look at compensation costs as a percentage of revenues. In this business you have to pay your people for results. The question becomes are they deleveraging their people costs as fast as there financial costs. In 2007 they paid out 44% in compensation and benefits. In 2008 taking out severance costs of approximately $275 million in Q4, the ratio of compensation and benefits to net revenues was 48.0% for 2008. 4% at these levels is critical. Sounds like Goldman has some ways to go.