Goldman Sachs Group Inc.
GS -0.45%
CEO Solomon’s salary is reduced by 36% by 2020, the penalty for the bank’s recognition last year of violating US laws in its negotiations with an investment fund at the heart of global corruption.
Mr. Solomon received a $ 17.5 million compensation package for 2020, lower than the $ 27.5 million he received for 2019, according to a security dossier filed Tuesday.
In October, Goldman agreed to pay nearly $ 3 billion to government officials in four countries to end an investigation into the work it did for 1MDB, a Malaysian fund used by prosecutors to bribe Malaysian politicians and to pay the Middle East. The bank said at the time that it would demand a total of $ 174 million in compensation from current and former executives.
Mr. Solomon’s salary for 2020 would have been $ 10 million higher, but for the actions taken by the board in response to the 1MDB saga, Goldman said in the submission. Its remuneration package consists of a base salary of $ 2 million, a cash bonus of $ 4.65 million and an award of $ 10.85 million linked to the bank’s performance over the next few years.
The costs and penalties associated with the aftermath of the 1MDB scandal took a bite out of what was a banner year for Goldman’s businesses, which received a major boost from the market downturn from the depths of the resonance of the coronavirus. The annual revenue of $ 44.56 billion was Goldman’s highest since 2009.
Other bank chiefs, who showed strong growth last year, were rewarded with large 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, reduced their pay cuts by 24% and 31% in 2020, respectively. Each would have earned $ 7 million more, but for 1MDB.
The three top executives were not “involved in or aware of the company’s participation in any illegal activity,” Goldman said in the documentation. However, their salaries were reduced because the bank’s board viewed the 1MDB scandal as an “institutional failure, which is not in line with the high expectations it places on the firm.”
Goldman helped raise $ 6.5 billion for 1MDB by selling bonds to investors. Prosecutors allege that senior Goldman executives ignored warning signs of fraud in their dealings with 1MDB and Jho Low, an advisor to the fund. Two Goldman bankers have been criminally charged in the scandal.
All in all, Goldman’s 1MDB transactions cost the bank more than $ 5 billion.
Write to Peter Rudegeair by [email protected]
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On January 27, 2021, the print edition appeared as ‘Goldman Sachs Cuts Pay Of CEO Solomon by 36%.’