Goldman Sachs plans average severance pay of $80k per person as it cuts staff

Goldman Sachs is cutting headcount in May. The firm confirmed today that it plans to implement its "annual performance review process" and to refine its "pyramid". In doing so, it expects to incur a severance charge of $150m.

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Speaking on today's investor call, Goldman CFO Dennis Coleman said $150m of severance costs will be incurred in the second quarter. As we reported previously, Goldman intends to cut 3-4% of staff in Q2, implying around 1,900 job cuts. Vice presidents are expected to be first in line for the chop and Goldman is reportedly asking other VPs and managing directors (MDs) to move to low-cost locations like Salt Lake City. 

If Goldman cuts 1,900 people in May, it will pay an average of nearly $80k per head in severance costs. Morgan Stanley cut 2,000 people in the first quarter, and said it paid $144m in severance charges, or $72k per head. 

Goldman is targeting a 60% efficiency ratio or operating margin. In the first quarter, the efficiency ratio was 60.6%. 

CEO David Solomon said he's seen no sign that there's been a "fundamental shift" in the business since tariffs were introduced, and that if they have an effect it will simply be "at the margins." Solomon also said that Goldman has a "big, diverse, strong-earning business," which might make a good tagline for an electronic music anthem if he turns back to DJ-ing again.

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