Goldman Sachs CEO David Michael Solomon participates in a discussion on “Women Entrepreneurs through Finance and Markets” at the World Bank on October 18, 2019, in Washington, DC.
Olivier Douliery | AFP | Getty Images
David Solomon, CEO of Goldman Sachs, saw his wages cut by just over a third by 2020 as part of a punishment for the bank’s role in the 1MDB scandal.
The bank, which had the highest revenue in the last ten years in the wake of the coronavirus pandemic, has admitted to committing iniquities during its working hours for a now infamous Malaysian government development fund called 1Malaysia Development Berhad , or 1MDB.
The pay cut for Solomon, which at about $ 10 million is about 36 percent of his annual salary, reflects previous penalties imposed on the bank and not Solomon’s behavior.
“While none of Mr Solomon, Mr Waldron or Mr Scherr was involved or aware of the company’s participation in any illicit activity when the company organized the 1MDB bond transactions, the Council considers the 1MDB issue to be an institutional failure, inconsistent with expectations. which he has for the company, “read a Goldman Sachs securities document from January 26. Solomon has been the bank’s CEO since 2018.
The compensation 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 pay cut. The cuts are part of a larger effort by the bank to recover $ 174 million in salary from former and current executives as part of its penalties.
The moves are part of the wider Council’s decision to compensate certain past and present members of senior management, in light of the government’s findings and regulatory investigations and the extent to which the firm’s government and regulatory issues related to 1Malaysia Development Berhad (” 1MDB ”)”, wrote the SEC document.
Solomon’s salary package consists of $ 2 million in base salary, a $ 4.65 million cash bonus and $ 10.85 million in stock compensation, which is 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 proved to be an excessive year for the bank, reaching revenues of 44 , $ 56 billion, the highest since 2009.
The 1MBD scandal, which remains under investigation since 2015, was one of the biggest stains on Goldman Sachs’ reputation at a time when the US bank was still facing its image problems in connection with criminal allegations of bad asset sales. during the financial crisis of 2008-09. .
Prosecutors have accused the bank’s top executives of ignoring fraud and bribery in search of hundreds of millions of dollars in bond sales taxes to raise money for the fund while working for the prime minister. Malaysian Najib Razak and 1MDB adviser Jho Low, who is accused of understanding the fraud.
The fund was thrown by Najib worth 700 million dollars, cash that went into the private bank account of the prime minister, and the proceeds from the sales of bonds were allegedly used to pay bribes to officials in Malaysia and the Middle East.
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 US investigations.
Two Goldman Sachs bankers have been criminally charged, while Najib has been sentenced to 12 years in prison and fined 210 million Malaysian ringgits ($ 51 million). Jho Low remains at large and is believed to be living in China, despite a red Interpol opinion issued by Malaysian authorities. The scandal allegedly cost Goldman Sachs more than $ 5 billion.