Goldman Sachs Group Inc. has increased David Solomon’s compensation by 24% to $31 million, despite a year of diminished earnings for the Wall Street giant.
The decision to boost the chief executive officer’s pay came amidst a challenging year, during which the firm witnessed a 24% decline in profit and focused on resolving internal conflicts while promoting a streamlined strategy. With the abandonment of its retail-banking ambitions, Goldman has reverted its attention to business lines favoured by Solomon’s predecessors.
Solomon’s compensation package, disclosed in a regulatory filing, includes a $2 million base salary and $29 million in variable compensation, with a significant portion allocated as restricted stock units totalling $20.3 million. Notably, Solomon’s pay increase surpassed that of other major US bank CEOs whose compensation details have been disclosed.
This year’s pay announcement was made following the conclusion of an annual executive gathering in Florida, contrasting with the timing of last year’s announcement.
Despite challenges, Goldman’s shares saw a 12% increase in 2023, ranking it fourth among the six largest US banks. The firm also initiated significant job cuts at the start of the year, eliminating approximately 3,200 positions.
Goldman faced obstacles in 2023, including sluggish capital markets affecting fee income and losses on real estate investments, alongside setbacks in its consumer strategy. These factors led to a notable decline in net income, totalling $8.52 billion for the year.
The compensation committee attributed Solomon’s increased pay to his “decisive leadership in recognizing the need to clarify and simplify the firm’s forward strategy,” acknowledging short-term performance impacts while emphasizing the actions’ significance for Goldman’s long-term trajectory.
Solomon’s compensation for 2022 had seen a 30% decrease following a more substantial profit decline that year.
Goldman, while maintaining three divisions in its results, has shifted focus away from its “platform solutions” business, redirecting investor attention to its investment bank and money-management divisions, which collectively contributed to approximately 95% of the firm’s revenue in the past year.
In comparison, JPMorgan Chase & Co. awarded CEO Jamie Dimon $36 million for last year, marking a 4.3% increase from the previous year, while Morgan Stanley increased James Gorman’s pay by 17% to $37 million for his final year as CEO.
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Published: 17 Feb 2024, 05:44 PM IST