David Michael Solomon, CEO of Goldman Sachs, will attend a discussion on ‘Women Entrepreneurs Through Finance and Markets’ at the World Bank on 18 October 2019 in Washington, DC.
Olivier Douliery | AFP | Getty Images
Goldman Sachs CEO David Solomon saw his salary cut to 2020 by just over a third as part of a penalty for the bank’s role in the 1MDB scandal.
The bank, which had its highest income in more than a decade last year despite the coronavirus pandemic, admitted that in its time it had worked on a now infamous Malaysian development fund called 1Malaysia Development Berhad, or 1MDB.
Solomon’s salary cut, which accounts for about 36% of his annual salary of $ 10 million, reflects the previous fines imposed by the bank and not Solomon’s actions.
“While none of Mr Solomon, Waldron or Scherr was involved in or aware of the company’s participation in any illegal activity at the time of the arrangement of the 1MDB securities transactions, the Board considers the matter of the 1MDB to be a institutional failure, which is not in line with the high expectations it has for the firm, ‘reads a Goldman Sachs security filed from January 26. Solomon has been CEO of the bank since 2018.
The pay cuts also apply to John Waldron, Goldman’s president and chief operating officer, and Stephen Scherr, Goldman’s chief financial officer, who each received a $ 7 million salary cut. The cuts are part of a broader effort by the bank to repay $ 174 million in payments from former and current executives as part of its fines.
The moves are part of the broad decision of the Board regarding the remuneration of certain former and current members of the senior management in light of the findings of the government and the regulatory investigations and the extent of the administration of justice of the firm and government matters. regarding 1Malaysia Development Berhad (“1MDB”), “wrote the SEC filing.
Solomon’s payment package consists of $ 2 million in base salary, a cash bonus of $ 4.65 million and a compensation of $ 10.85 million in inventory, based on the bank’s performance. His salary for 2020 was then $ 17.5 million instead of the $ 27.5 million he received in 2019, despite the fact that last year turned out to be an excessive year for the bank, with an income of $ 44.56 billion, the highest since 2009.
The 1MBD scandal, which has been under investigation since 2015, was one of the biggest stains on Goldman Sachs’ reputation at a time when the US bank was still dealing with its image problems due to criminal allegations of poor asset sales during the 2008-09 financial crisis. .
Prosecutors at the time accused the bank’s senior executives of neglecting fraud and bribery in the course of hundreds of millions of dollars in bond sales fees to raise money for the fund while representing then-Prime Minister Najib Razak and Malaysia. ‘s 1MDB adviser worked is accused of having mastered the fraud.
Najib spent the sum of $ 700 million, cash that went to the prime minister’s own private bank account, and the proceeds from the bond sales were allegedly used to pay bribes to Malaysian and Middle Eastern officials.
Goldman pleaded guilty in October to his role in the scandal and agreed to pay nearly $ 3 billion to government officials in four countries to end U.S. investigations.
Two Goldman Sachs bankers have been charged with criminal offenses, while Najib has been sentenced to 12 years in prison and fined 210 million Malaysian ringgit ($ 51 million). Jho Low remains at large and believes he lives in China, despite an Interpol red notice issued to him by the Malaysian authorities. The scandal allegedly cost Goldman Sachs more than $ 5 billion.