Goldman Sachs has significantly reduced its 2010 Q3 pay pool from a year ago, while Morgan Stanley cut the investment bank's bonus pool 8% - making it smaller than the money reserved to pay broker, who produced less revenue.

    Goldman.   The cuts result from lower profits that resulted from of a slowdown in trading, along with the fact that Goldman is now in the spotlight over salary and bonuses.  During the first 9 months of 2010, Goldman accumulated $13.2 billion for compensation and benefits or 43% of its total revenue - which averages out to $370,000 per employee, versus $527,000 a year ago.  The pay accruals were the lowest 9-month compensation-revenue ratio since Goldman went public in 1999, according to CFO David Viniar.

     M. Stanley.   Pay at the firm’s institutional securities unit, which includes traders and bankers, dropped to $5.3 billion for the first 9 months of 2010, even as revenue rose 32% to $12.7 billion.  Compensation at the brokerage unit, which expanded through last year's joint venture with Citigroup Inc.’s Smith Barney, climbed 41% to $5.8 billion, or 63% of its $9.3 billion revenue.

James Gorman, who became Morgan Stanley’s CEO after overseeing the brokerage division, has promised to reduce the portion of the company’s overall revenue awarded in compensation, which surged to 62% last year.  The company has set aside $12 billion for compensation and benefits for the first 9 months of 2010, up 12% from 2009, as revenue surged 43%. The arithmetic works out like this:  so far this year, each of the firm's 62,864 employees will be paid, on average, nearly $191,000 - up from $175,000 last year.   [Bloomberg, NYT Dealbook, 10/20]