Goldman Sachs slashes CEO Solomon’s pay about 30% to US$25m

GOLDMAN Sachs Group cut chief executive officer (CEO) David Solomon’s compensation by about 30 per cent to US$25 million for 2022, a year in which the share price and profit tumbled and the firm retreated from a highly public effort to create a consumer bank.

The package includes a US$2 million base salary and US$23 million in variable compensation, with US$16.1 million of that in the form of restricted stock units, according to a filing Friday (Jan 27).

The firm’s compensation committee considered factors including Goldman’s performance and how it did relative to its main rivals in determining Solomon’s pay, according to the filing.

“The committee also took into account the firm’s continued progress in its strategic evolution as well as Mr Solomon’s strong individual performance and effective leadership,” it said. “These factors were considered in the context of a challenging operating environment.”

The investment-banking giant poured billions of dollars into its consumer effort, dubbed Marcus, only to suffer US$3.8 billion in pre-tax losses over the past three years. Solomon has conceded that the company tried to push too quickly into the sector. 

Goldman embarked on one of its biggest rounds of job cuts ever this year, with a plan to eliminate about 3,200 jobs as it sought to keep a lid on costs.

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An industry-wide slowdown has crimped earnings across Wall Street. At Goldman, net income fell 48 per cent to US$11.3 billion last year, and the bank’s return on equity was 10.2 per cent, below the 14-16 per cent target it set for itself earlier in 2022.

The shares dropped 10 per cent in 2022, outperforming the 12 per cent decline in the S&P 500 Financials Index.

Banking executives have been bracing for their compensation to tumble as Wall Street tries to contain costs amid a dealmaking slowdown.

Solomon, 61, was one of the best-paid CEOs at a major US bank for 2021, receiving US$35 million in compensation – a figure matched by Morgan Stanley’s James Gorman for that year. For 2022, Gorman saw his pay cut by 10 per cent to US$31.5 million. JPMorgan Chase left CEO Jamie Dimon’s pay unchanged at US$34.5 million for that year. BLOOMBERG