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David Solomon's Goldman Sachs pay rise a source of incredulity for some at the firm

If Brian Moynihan wants some help negotiating his pay at Bank of America, he could always turn to David Solomon at Goldman Sachs for advice. 

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While net earnings at Goldman Sachs fell 24% last year, to their lowest level for four years, Solomon's pay coincidentally increased 24% to $31m, its highest level since 2021. 

In the notes explaining the pay rise, which was delivered entirely as restricted stock, Goldman's compensation committee said Solomon had been rewarded for seven things: his decisive leadership and clarification of the firm's strategy, his swift execution of decisions that narrowed Goldman's strategic focus, his progress on strategic priorities, his client focus, his dedication to the firm's culture and core values, and his promotion of the firm's "risk management and control environment." By comparison, Goldman's lower profits last year were the non-recurrent result of "selected items related to the execution of the firm’s narrowed strategic focus," they said. 

Even after his pay rise, Solomon is still paid less than Jamie Dimon at JPMorgan ($36m) and less than the $37m that outgoing CEO James Gorman earned at Morgan Stanley. If he felt so inclined, Solomon could presumably leave for a lucrative job on the buy-side, so Goldman needs to keep him happy. 

But some at Goldman Sachs are incredulous about the pay rise given to their leader. After pay was squeezed for 2022, Goldman only increased overall compensation spending by 2% last year. This followed 3,200 job cuts, with the result that average pay per head rose nearly 10% from $312k to $342k. That wasn't bad, but some suggest Solomon's increase is still unfair. 

"During comp season in January, we were told our numbers would be down or flat because the bank's performance had been down the previous year," claims one insider. "A few people were paid up, but not many people got more than 4-5%. A 24% increase seems shocking in the context of a pay for performance culture," he adds. Speaking after Goldman bonuses were allocated, one headhunter said people at the firm were happy with moderate bonuses because they recognized that it was a bad year and were happy to keep their jobs. Solomon's pay rise has the potential to disrupt this balance. 

Solomon's pay for 2023 was the second highest it's been since he arrived in 2019. In deciding the compensation of the CEO, Goldman's compensation committee says it considers, 'the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at the Company’s principal competitors and other comparable companies, the awards given to the CEO in past years, and the Company’s risk management policies and practices.' 

In 2023 there were complaints about alleged comments Solomon made to students, alleged comments he made internally, and his allegedly excessive use of private jets. Defenders of Solomon said people were briefing against him.

A spokesperson for Goldman Sachs said: “Our philosophy on compensation across the firm hasn’t changed. We pay for performance, with a focus on retaining top performers."

They added: "The Board recognized David's leadership directing the firm--especially in making the tough decisions to narrow our focus, to swiftly execute the strategy, and to continue to deliver results for shareholders.”

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AUTHORSarah Butcher Global Editor

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