Goldman Sachs, the securities firm that set a compensation record on Wall Street in 2007, is now demonstrating how little it can pay. The portion of revenue allotted for salaries, bonuses, stock awards and benefits was 38 per cent last year, down from 42 per cent a year earlier and the lowest since 2009, the company said on Wednesday. The move helped the bank post a fourth-quarter profit that beat analysts' estimates and pushed return on equity to 10.7 per cent for the year, up from 3.7 per cent. The stock climbed the most in 10 months. "It's a better time to be an investor than when bonuses are becoming ridiculous," said Michael Vogelzang, chief investment officer at Boston Advisers. "You're seeing a massive amount of overcapacity in the business and it's continuing to push down the price of labour." Goldman Sachs still may be one of few Wall Street firms that paid employees more for last year because revenue surged 19 per cent and it reduced staff by 3 per cent. JP Morgan Chase, the biggest US bank by assets, cut compensation expense at its corporate and investment bank 3 per cent as revenue at that division rose 1 per cent. The pay expense was 33 per cent of revenue for the year, down from 34 per cent. Morgan Stanley, which is eliminating 1,600 jobs, would defer 100 per cent of bonuses for some senior bankers and traders over three years as it reined in costs, a person briefed on the matter said earlier this week. Deutsche Bank was weighing bonus cuts for last year of as much as 20 per cent for investment bankers in Europe, while those in New York would see smaller declines, four people briefed on the matter said this week. Anton Schutz, president of Mendon Capital Advisers, said control of expenses, which increased 1 per cent last year even as revenue climbed 19 per cent, was something Goldman Sachs investors had craved. "One of the things we've been looking for in this space for a long time is operating leverage," said Schutz. "That's exciting for shareholders. I don't think it's so good for employees unless they own a lot of stock." Goldman Sachs rose 4.1 per cent on Wednesday, the biggest increase since March. The shares have gained 11 per cent this year on top of a 41 per cent advance in 2011.