Goldman Sachs Group Inc.
GS -0.45%
reduced the salary for 2020 of chief executive David Solomon by 36%, a punishment for the bank’s admission last year that it violated US laws in its dealings with an investment fund, at the center of a global corruption ring.
Mr. Solomon received a $ 17.5 million compensation package for 2020, down from the $ 27.5 million he earned for 2019, according to a securities deposit on Tuesday.
In October, Goldman agreed to pay nearly $ 3 billion to government officials in four countries to end an investigation into its work on 1MDB, a Malaysian fund that prosecutors had claimed was used to pay bribes to politicians in Malaysia and the Middle East. At the time, the bank said it would need a total compensation of $ 174 million from current and former directors.
Mr Solomon’s 2020 salary would have been $ 10 million higher, but for the actions his board took in response to the 1MDB saga, Goldman said in the file. Its compensation package consisted of a base salary of $ 2 million, a cash bonus of $ 4.65 million and a share price of $ 10.85 million, related to the bank’s performance over the next few years. .
The costs and fines associated with the aftermath of the 1MDB scandal have taken a bite out of what has been a busy year for Goldman’s business, which has gained momentum from the return of markets from the depths of the coronavirus recession. Annual revenue of $ 44.56 billion was Goldman’s highest since 2009.
Other bank chiefs who witnessed 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, President and Chief Operating Officer of Goldman, and Stephen Scherr, Chief Financial Officer of Goldman, saw pay cuts in 2020 by 24% and 31%, respectively. Each would have earned an extra $ 7 million, but for 1MDB.
The three top executives were not “involved or aware of the company’s participation in any illegal activity,” Goldman said in the file. However, their salary was reduced because the bank’s board of directors considered the 1MDB scandal as “an institutional failure, incompatible with the high expectations it has for the company”.
Goldman helped raise $ 6.5 billion for $ 1 billion by selling bonds to investors. Prosecutors said senior Goldman executives ignored warning signs of fraud in their dealings with 1MDB and Jho Low, a fund advisor. Two Goldman bankers have been charged in the scandal.
In conclusion, Goldman’s relationship with 1MDB cost the bank more than $ 5 billion.
Write to Peter Rudegeair to [email protected]
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It appeared in the January 27, 2021 print edition that “Goldman Sachs reduces CEO Solomon’s salary by 36%.”