Bumper bonuses are back for Goldman employees

As befits their nickname, the banking system's 'Masters of the Universe' are not easily subdued. Today, Wall Street giant Goldman Sachs is set to defy public opinion and the wishes of politicians in Washington and London by allocating a lavish proportion of its third-quarter revenues for staff pay and bonuses.

The bank is expected to announce it is putting aside as much as $5bn thanks to a surge in profits between July and September. Added to the existing pool of bonus money, this could mean the end-of-year pay and bonus pot being not far off the record $21bn paid out in 2007, before the troubles began in Wall Street and Goldman Sachs nearly went to the wall - and would have done without the injection of American tax dollars.

In London, the average payout for Goldman's 5,500 European staff is expected to be around £500,000. Senior executives

working at the headquarters in Fleet Street can expect bonuses in the millions.

Among those in line for a bumper payout is Michael Sherwood, vice-chairman and co-chief executive of Goldman Sachs Europe, who, at the age of just 43, is already said to be worth more than £225m.

Last year, along with other bosses at the bank, Sherwood turned down his multi-million bonus. A cynic could argue he had every reason to do so: in the run-up to the credit crunch he was reportedly arguing that the US was set for strong growth and that the world economy was in a similar position.

Despite being proved wrong, he has been staunch in his defence of the company he joined straight from university in 1986. "Goldman Sachs trades in a measured way," he explained last year. "When other firms were trading at 20 or 30 times their earnings, we were in single digits." That could explain why Goldmans rode the financial storm so successfully and has already repaid its US bank bailout money in addition to posting impressive figures.

How Sherwood spends his bonus remains to be seen. Goldman Sachs staff have been warned by their boss Lloyd Blankfein to show some sensitivity with their purchases in troubled times but Sherwood is unlikely anyway to have his head turned by flashy trinkets after 23 profitable years in the banking industry.

Indeed a good bonus today could benefit others as much as it does him. Although he began his career in the testosterone-fuelled days of the late 1980s and acquired a reputation befitting those times, he is said to have mellowed with age. He lives with his wife in an apartment overlooking Regent’s Park, and they have donated considerable sums to the Tate Modern and to charities supporting children's education and sport.

Sherwood says work-place attitudes at the company today compared to those in the Thatcher era are like "like night and day". He has even taken an active role in trying to increase the number of women in senior positions at Goldman Sachs – not an ambition one associated with the Masters of the Universe in their heyday.

EDITOR'S NOTE: Since this item was posted, Goldman Sachs announced third-quarter profits of $3.4bn and a pay and bonus allocation of $5.4bn, higher than expected. It takes the 2009 pay and bonus pool to $16.7bn for the year to date.