Goldman Sachs Group Inc.
GS -0.45%
cut Executive President David Solomon’s 2020 salary by 36%, a punishment for the bank’s admission last year that it violated U.S. law in its dealings with an investment fund at the heart of a global corruption circle.
Solomon received a $ 17.5 million compensation package for 2020, down from the $ 27.5 million he received in 2019, according to a bond deposit on Tuesday.
In October, Goldman agreed to pay nearly $ 3 billion to government officials in four countries to end an investigation into the work done for 1MDB, a Malaysian fund that prosecutors claimed was used to pay bribes to Malaysian politicians. and in the Middle East. The bank said at the time that it would receive a total of $ 174 million in compensation from current and former executives.
Solomon’s payment in 2020 would have been $ 10 million higher, but for the actions his board of directors took in response to the 1MDB saga, Goldman said in the process. His remuneration package consisted of a base salary of $ 2 million, a cash bonus of $ 4.65 million and a share premium of $ 10.85 million that is linked to the bank’s performance in the coming years.
The costs and fines related to the aftermath of the 1MDB scandal have damaged what was an exceptional year for Goldman’s business, which received a major boost as markets recovered from the depths of the coronavirus recession. Annual revenue of $ 44.56 billion was Goldman’s highest since 2009.
Other bank presidents who have seen strong growth last year have been rewarded with huge increases. Morgan Stanley paid CEO James Gorman $ 33 million for his work in 2020, an increase of 22%.
John Waldron, Goldman’s president and chief operating officer, and Stephen Scherr, Goldman’s chief financial officer, saw their 2020 salaries cut by 24% and 31%, respectively. Each would have earned $ 7 million more, but for 1MDB.
The top three executives were not “involved in or aware of the company’s participation in any illicit activity,” Goldman said in the process. However, his payment was reduced because the bank’s board saw the 1MDB scandal as “an institutional failure, inconsistent with the high expectations it has for the company”.
Goldman helped raise $ 6.5 billion for 1MDB by selling bonds to investors. Prosecutors claimed that senior Goldman executives ignored the warning signs of fraud in their dealings with 1MDB and Jho Low, a consultant with the fund. Two Goldman bankers were charged criminally for the scandal.
Altogether, Goldman’s negotiations with 1MDB cost the bank more than $ 5 billion.
Write to Peter Rudegeair at [email protected]
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Published in the January 27, 2021 print edition as ‘Goldman Sachs cuts CEO Solomon’s salary by 36%’.