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THE GOLDMAN SACHS GROUP, INC.

(GS)
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Goldman Sachs : Solomon Takes $10 Million Pay Cut for 1MDB Scandal -- Update

01/26/2021 | 07:25pm EDT

By Peter Rudegeair

Goldman Sachs Group Inc. slashed Chief Executive David Solomon's 2020 pay by 36%, punishment for the bank's admission last year that it broke U.S. laws in its dealings with an investment fund at the heart of a global corruption ring.

Mr. Solomon received a $17.5 million compensation package for 2020, down from the $27.5 million he got for 2019, according to a securities filing on Tuesday.

In October, Goldman agreed to pay nearly $3 billion to government officials in four countries to end an investigation into work it performed for 1MDB, a Malaysian fund that prosecutors had alleged was used to pay bribes to politicians in Malaysia and the Middle East. The bank said at the time that it would take a total of $174 million in compensation from current and former executives.

Mr. Solomon's 2020 pay would have been $10 million higher but for the actions its board of directors took in response to the 1MDB saga, Goldman said in the filing. His compensation package consisted of a $2 million base salary, a $4.65 million cash bonus and a $10.85 million stock award that is tied to how well the bank performs over the next few years.

Costs and fines related to the fallout from the 1MDB scandal took a bite out of what was a banner year for Goldman's businesses, which got a big boost from the markets' bounceback from the depths of the coronavirus recession. Annual revenue of $44.56 billion was Goldman's highest since 2009.

Other bank chiefs that presided over strong growth last year were rewarded with big raises. Morgan Stanley paid CEO James Gorman $33 million for his work in 2020, an increase of 22%.

John Waldron, Goldman's president and chief operating officer, and Stephen Scherr, Goldman's finance chief, saw their 2020 pay cut by 24% and 31%, respectively. Each would have earned $7 million more but for 1MDB.

The three top executives weren't "involved in or aware of the firm's participation in any illicit activity," Goldman said in the filing. However, their pay was reduced because the bank's board viewed the 1MDB scandal as "an institutional failure, inconsistent with the high expectations it has for the firm."

Goldman helped raise $6.5 billion for 1MDB by selling bonds to investors. Prosecutors alleged that senior Goldman executives ignored warning signs of fraud in their dealings with 1MDB and Jho Low, an adviser to the fund. Two Goldman bankers have been criminally charged in the scandal.

All told, Goldman's dealings with 1MDB cost the bank more than $5 billion.

Write to Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

01-26-21 1925ET

Stocks mentioned in the article
ChangeLast1st jan.
MORGAN STANLEY -0.06% 96.48 Delayed Quote.40.79%
THE GOLDMAN SACHS GROUP, INC. -0.28% 374.84 Delayed Quote.42.14%
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Financials (USD)
Sales 2021 55 113 M - -
Net income 2021 18 654 M - -
Net Debt 2021 312 B - -
P/E ratio 2021 7,10x
Yield 2021 1,77%
Capitalization 133 B 133 B -
EV / Sales 2021 8,07x
EV / Sales 2022 10,2x
Nbr of Employees 40 800
Free-Float 37,3%
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Mean consensus OUTPERFORM
Number of Analysts 28
Last Close Price 374,84 $
Average target price 409,80 $
Spread / Average Target 9,33%
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Managers and Directors
David Michael Solomon Chairman & Chief Executive Officer
John Edward Waldron President & Chief Operating Officer
Stephen M. Scherr Chief Financial Officer & Executive Vice President
Marco Argenti Co-Chief Information Officer
George C. Lee Co-Chief Information Officer
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