Having set aside nearly US$17bn to pay employees in the first nine months of this year, executives from Goldman Sachs are taking to the road to meet with shareholders to “discuss our earnings as well as our compensation principles,” the bank said today. Goldman also released the presentation it gives to investors about its pay practices.

Sure, 20-odd billion dollars for salaries and benefits this year—around US$700,000 per employee, on average—may sound like a lot. But the bank argues that in the context of a “human capital driven industry” this is in line with operating expenses or overheads at widget makers of similar size. What’s more, after detailing the many ways that Goldman Sachs outperforms its peers in terms of profitability and shareholder returns, the bank notes that its correlation between revenue growth and compensation growth is essentially one-to-one. The point this makes is that employees are rewarded in line with the growth of the business. But since the credit bubble burst, hasn’t the idea of linking pay to revenues—and not profits, costs, risks or a host of other metrics—gone the way of the subprime-backed CDO-squared?

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