Goldman Sachs gave CEO David Solomon a 19.6% pay raise in 2019, the bank revealed Friday in a proxy filing. That breaks a trend among big banks to either cut or keep steady the compensation for top executives.
The boost, to $27.5 million from $23 million in 2018, comes as the bank announced a plan in January to trim $1.3 billion in operating costs by shedding some managers and moving employees to lower-cost areas.
- The raise makes Solomon the second-highest-paid CEO among Wall Street's big banks, behind JPMorgan Chase’s Jamie Dimon. Solomon’s compensation, compared with the median figure at Goldman Sachs, is about 178 to 1, according to Reuters.
Solomon’s $4.5 million raise may be the product of taking the last step up on the corporate ladder — 2019 marked his first full year in charge; he spent much of 2018 as CEO-in-waiting to Lloyd Blankfein.
It may also be seen as a reward for a year in which Goldman shares jumped 38%, according to Bloomberg. However, those same shares are down 40% so far in 2020 as the coronavirus outbreak continues to wreak havoc on the stock market.
The bank was similarly generous with Solomon’s top deputies, as President and Chief Operations Officer John Waldron and Chief Financial Officer Stephen Scherr each saw $4.5 million bumps for 2019 — to $24.5 million for Waldron and $22.5 million for Scherr.
Solomon’s compensation breaks down to a $2 million salary, a $7.65 million cash bonus and $17.85 million in performance share units, a longer-term perk. It’s the richest package for a Goldman CEO since Blankfein earned $41 million in 2008, according to The Wall Street Journal.
Solomon’s 19.6% raise from 2018 far outweighs those of top executives at other U.S. banks. Dimon’s $31.5 million for 2019 represents a 1.6% increase over the previous year. Morgan Stanley CEO James Gorman took a nearly 7% pay cut — to $27 million — for 2019, even though the bank reported a profit jump of 46%. Compensation for Bank of America CEO Brian Moynihan and Citi CEO Michael Corbat remained flat at $26.5 million and $24 million, respectively.
The 1MDB scandal, in which money was allegedly diverted to a Malaysian government development fund, presents a wild card for Goldman compensation — although not for 2019. The bank last year justified withholding millions of dollars of 2018 bonuses to Blankfein, former Vice Chairman Mike Evans and the bank’s former international co-head, Michael Sherwood, pending the outcome of the matter. Those bonuses still have not been paid. However, the bank said it was "not necessary" to institute such a clawback for 2019, according to the Financial Times. Solomon previously oversaw the division that became caught up in the 1MDB scandal, Bloomberg reported.
Criminal investigations have not yet wrapped up, but Goldman took a $1 billion legal charge related to the case in its latest quarterly earnings statement.