Goldman compensation: $1 mln per employee in sight

* Goldman sets aside $226,156 per employee in 2nd quarter

* Compensation, benefits surge 75 percent per employee

By Juan Lagorio

NEW YORK, July 14 (Reuters) - The average Goldman Sachs Group Inc (GS.N) employee is within striking distance of $1 million in compensation and benefits this year, just nine months after the bank received a $10 billion U.S. government bailout.

The figure will likely fuel criticism of the politically connected bank, especially amind the widening recession and rising unemployment. In addition to the bailout, Wall Street's biggest surviving securities firm also benefited from several other government schemes during the depths of last year's financial crisis.

Goldman on Tuesday said money set aside for pay surged 75 percent in the second quarter. Compensation and benefits costs were $6.65 billion, up 47 percent from the equivalent quarter in 2008.

Given a 16 percent reduction in staff from last year, to 29,400, the bank set aside an average $226,156 per employee in the second quarter, up from $129,200 in a year ago.

If the quarterly figure is annualized, it comes to $904,624 per employee.

Goldman Sachs said the ratio of compensation and benefits to net revenue rose to 49 percent in the second quarter from 48 percent a year earlier.

The bank reported a 33 percent increase in second-quarter earnings to $2.7 billion on strong trading results. It said higher compensation was primarily due to increased net revenue.

The compensation figures include cash salaries, estimated year-end bonuses, equity awards and other items such as payroll taxes, severance costs and employee benefits.

After Lehman Brothers collapsed in September and investors worried other Wall Street banks were also in danger of going under, Goldman Sachs converted from an investment bank to a bank holding company. The move gave it permanent access to U.S. government funding, in exchange for stricter regulation, and was meant to restore market confidence.

Goldman received the $10 billion bailout to shore up its balance sheet. It recently repaid those funds as the U.S. Treasury decided it was strong enough to survive without government support.

The bank also received access to a series of government programs designed to shore up the financial system, such as the ability to issue bonds backed by the government, and was a major beneficiary of the government's $180 billion rescue of insurance giant American International Group Inc (AIG.N).

To its credit, Goldman managed to sidestep the worst of a financial crisis that caught rivals off guard and generated massive credit losses and writedowns. (Reporting by Juan Lagorio; Editing by Martin Howell and John Wallace)