Goldman Sachs Group Inc. cut Chief Executive Officer David Solomon’s annual compensation 36% after deducting a penalty for the bank’s 1MDB bribery scandal.
The board reduced his package to $17.5 million for 2020, down from $27.5 million a year earlier. The payout fell after Solomon was required to return about $10 million to make amends for the firm’s criminal role in the looting of the Malaysian investment fund, the bank said in a filing on Tuesday.
Excluding that penalty, the board effectively kept Solomon’s pay flat for the year.
The decisions cap a year in which Goldman’s revenue soared 22% and the bank paid the highest penalty ever levied by the U.S. in a foreign bribery case. While Solomon wasn’t accused of wrongdoing, the board said in October it would be “appropriate” to withhold $31 million in compensation for the CEO and three of his top deputies after the firm entered into more than $5 billion in settlements to resolve civil and criminal probes.
In October, just weeks before the U.S. elections, Goldman Sachs sealed a pact with the U.S. Justice Department and other regulators that had been investigating the firm’s role in raising billions for 1MDB that were later siphoned off by officials close to Malaysia’s government. The board vowed to hold current and former executives accountable by seeking clawbacks, forfeitures and pay deductions.
While the bank, like rivals, did benefit last year from market tumult that fueled client trading, industry leaders have been frugal with compensation for the rank-and-file. Goldman’s spending per person on compensation rose only 2% last year.
Goldman is going through a phase of belt-tightening to sharply cut costs to realize more than a billion dollars in annualized savings. The bank has achieved about half of the $1.3 billion goal it had sketched out at its 2019 investor day. Goldman abandoned its own pandemic pledge to pause firings, and carried out at least two separate rounds of job cuts in 2020 to rein in costs.
Last week, Morgan Stanley boosted CEO James Gorman’s pay 22% to $33 million after a third straight year of record earnings. He now holds the title of the most well-paid CEO of a prominent U.S. bank, leaping past JPMorgan Chase & Co.’s Jamie Dimon, whose compensation package held steady at $31.5 million.
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