David Michael Solomon, CEO of Goldman Sachs, participates in a discussion of “Women entrepreneurs through finance and markets” at the World Bank on October 18, 2019 in Washington, DC.
Olivier Douliery | AFP | Getty Images
Goldman Sachs CEO David Solomon saw his salary cut by just over a third in 2020 as part of a punishment for the bank’s role in the 1MDB scandal.
The bank, which had its highest revenue in more than a decade last year, despite the coronavirus pandemic, admitted to having committed irregularities during its working time for a now infamous Malaysian government development fund called 1Malaysia Development Berhad, or 1MDB .
The cut in pay for Solomon, which at $ 10 million constitutes approximately 36% of his annual salary, reflects previous penalties imposed on the bank and not Solomon’s own conduct.
“Although none of Messrs. Solomon, Waldron or Scherr was involved in or aware of the company’s participation in any illicit activity at the time the company organized 1MDB securities transactions, the Board sees the 1MDB issue as an inconsistent, institutional failure with the high expectations it has for the company, “read a bond deposit from Goldman Sachs on January 26. Solomon has been the bank’s CEO since 2018.
Remuneration reductions also apply to John Waldron, Goldman’s president and chief operating officer, and Stephen Scherr, Goldman’s chief financial officer, who each received a $ 7 million cut in wages. The cuts are part of a broader effort by the bank to recover $ 174 million in salaries from former and current executives as part of its penalties.
The moves are “part of the Council’s broader determination regarding the remuneration of certain former and current members of senior management in light of the government’s findings and regulatory investigations and the magnitude of the company’s resolution of governmental and regulatory issues related to 1Malaysia Development Berhad (“1MDB”) “wrote the SEC filing.
Solomon’s payment package consists of $ 2 million in base salary, a cash bonus of $ 4.65 million and $ 10.85 million in stock compensation, which is based on the bank’s performance. His salary for 2020 was $ 17.5 million instead of the $ 27.5 million he received in 2019, despite the fact that last year turned out to be an abundant year for the bank, reaching revenue of $ 44 , 56 billion, the highest since 2009.
The 1MBD scandal, which has remained under investigation since 2015, was one of the biggest stains on Goldman Sachs’ reputation at a time when the American bank was still dealing with its image problems due to criminal allegations of bad asset sales during the financial crisis. of 2008-09.
Prosecutors accused senior bank executives at the time of neglecting fraud and bribery in pursuit of hundreds of millions of dollars in bond sales fees to raise money for the fund while working for then-Prime Minister of Malaysia Najib Razak and the 1MDB advisor Jho Low, is accused of mentoring the fraud.
The fund was stolen by Najib for $ 700 million, money that went into the prime minister’s own private bank account, and the proceeds from the sale of bonds were reportedly used to pay bribes to Malaysian and Middle Eastern officials.
In October, Goldman pleaded guilty to his role in the scandal and agreed to pay nearly $ 3 billion to government officials in four countries to end American investigations.
Two bankers at Goldman Sachs were criminally charged, while Najib was sentenced to 12 years in prison and fined 210 million Malaysian ringgits ($ 51 million). Jho Low remains at large and is believed to be living in China, despite an Interpol Red Warning sent to him by Malaysian authorities. The scandal cost Goldman Sachs more than $ 5 billion.