Inthis paper focus is on Goldman Sachs Group, Inc. Goldman Sachs Group,Inc. is an multinational firm headquartered in America and hasspecial interests in the area of banking globally, securities, andmanagement of investments as well as other financial services mainlywith the institutional clients. The competitor that will beconsidered for this study is Morgan Stanley. Headquartered in NewYork, US, Morgan Stanley is one of the leading investment firms thatmainly concentrates in the area of wealth management, investmentbanking and services touching on sales and trading (Luo et al.,2015).
AtGoldman Sachs, the compensation plans are usually reviewed on annualbasis and the review consists of salary, discretionary compensationand some local allowances as defined or applicable (Tricker, 2015).Compensation is based on different factors and these include theperformance of the firm, divisional performance and individual’sperformance and deliverability. The company ensures that itsemployees are properly compensated and often aim at high pay level inthe long term. The firm also has the equity award program which aimsat attracting, retaining and motivating the employees. There are alsowealth creation chances and special investments within the company.Healthcare, insurance and other benefits like retirement plan areequally taken into consideration. The CEO of Goldman also gets somebonuses that are mainly pegged on their performances. A case in pointis the CEO of Goldman, Llyod Blankfein taking home $24 million in2014 as part of compensation package.
AtMorgan Stanley, there is the CMDS committee that establishes thetarget compensation and this ranges from $13 million or less to $23million or more. The main determinants of this range include thehistorical compensation that is at peer firms and these firms have tobe of similar size, scope and complexity. For Morgan Stanley, theyhave changed the Compensation Deferral Policy and they currently workwith Reduce Ongoing Fixed Obligations and Compensation or the netrevenues ratios and at the same time keeping the significant deferrallevels (Luo et al.,2015). The compensation plans for CEO also entailsa boost depending on the performance of the firm. For instance, theCEO got a pay package of $22.5 million in the year 2014 and this wasas a result of the turnaround plan that actualized.
Inthe board at Goldman Sachs Group 10 out of 13 are independent. Thereis expansive lead director role, which essentially serves as abalance of the chair and the CEO. The members are often highlyengaged with frequent interaction being with the management and thefellow board members (Tricker, 2015). Members are 56 in number withthem forming the board, the various committees, and thesubcommittees. Often, the members are committed to get active andopen engagement with all the constituents. Currently, the boardtenure is at six years.
Onthe other hand, at Morgan Stanley, the board is mainly made up ofmembers who have a wealth of experience and are known to be personsof high reputation and integrity. The board is mainly made up ofbetween 10 to 15 members. Majority of the directors in the board areindependent. Those who form the board are expected to have high levelof responsibility, be leaders who have interest of the company andthe shareholders at heart. Demographic background and diversity inthe perspective of the candidates inform the choice.
StockOwnership and Ownership Concentration
AtGoldman Sachs, the shares that are held by all insiders and the 5% ofowners total to 6%. The shares that are held by institutional andmutual fund owners are at 78%. Moreover, the institutional and mutualfund owners hold a float at 78%. The total number of the institutionsthat hold shares is at 1124. For Morgan Stanley, the insiders and 5%of the owners hold 0% of the shares. For the institutional and mutualfund owners they hold 81% of the shares. The percentage of the floatheld by institutional and mutual fund owners stand at 81%. Thenumbers of institutions that hold the shares stand at 910 (Luo etal., 2015).
Codeof Business Conduct
AtGoldman Sachs, one of the codes of business is trust. Trust ismaintained while doing business and is defined by highest standardsand degrees of integrity. Principles and values also defines businessat Goldman Sachs as individuals are selected mainly based on theirpotentials, principles and values. The company also maintains ethicalbehavior and it is key for a person to advance professionally. Thebusiness strives to maintain transparency and if there is anyconflict of interest in business then the business is abandoned.
Ofgreat interest to Morgan Stanley is integrity and highest ethicalstandards while ding their business. This is virtually similar to thecode of conduct at Goldman Sachs. The code of ethics defines thestandards the company expects from the different employees right fromthe management level (Luo et al., 2015). Through the definedstandards, right decisions can be made in the company.
Luo,X., Wang, H., Raithel, S., & Zheng, Q. (2015). Corporate socialperformance, analyst stock recommendations, and firm futurereturns. StrategicManagement Journal, 36(1),123-136.
Tricker,R. I. (2015). Corporategovernance: Principles, policies, and practices.Oxford University Press, USA.