Proxy adviser Glass Lewis urged Goldman Sachs shareholders Thursday to vote against an executive pay package it said shows a “significant disconnect between pay and performance.”
At issue, the package would boost Goldman CEO David Solomon’s compensation for 2023 to $31 million — a 24% jump over the previous year. The increase would come, though, for a year in which the bank saw its net income decrease by 24%.
Solomon isn’t the only Goldman executive to see a double-digit percentage-point raise: The bank’s chief operating officer, John Waldron, would receive a 28% boost to $30 million — meaning Goldman’s No. 2 would out-earn three CEOs from the U.S.’s top six banks.
The Glass Lewis resolution is nonbinding, so even if a sizable number of shareholders vote it down at Goldman’s annual general meeting April 24, the bank could choose to go ahead with the compensation plan. That would echo a scenario JPMorgan Chase saw in 2022, when 31% of shareholders rejected a pay package that gave CEO Jamie Dimon a $52.6 million “special award.”
Glass Lewis graded Goldman’s executive pay package an “F” for the second consecutive year — although last year it recommended shareholders green-light the package despite the low mark.
This year’s package “does not instill a sense of optimism that the ongoing disconnect will see improvement in the near term,” Glass Lewis wrote Thursday, according to Bloomberg. “Given these factors, we believe that shareholders may reasonably withhold support from this proposal at this time.”
Glass Lewis joined fellow proxy adviser ISS in asking Goldman to separate its CEO and board chairman roles — both now held by Solomon.
An independent chair "is nearly always preferable to having a single individual lead both the board and the executive team," Glass Lewis wrote Thursday, according to Reuters.
Glass Lewis made the same request Friday of Bank of America, according to Reuters. Brian Moynihan holds both the chair and CEO roles at that bank. Dimon, meanwhile, holds both roles at JPMorgan Chase.
Glass Lewis’ recommendation to Goldman comes after the bank in January named its former CFO, David Viniar, as the board’s next independent lead director — to succeed Adebayo Ogunlesi, who will step down this month.
Institutional Shareholder Services highlighted Goldman’s ill-fated flirtation with consumer banking in its recommendation for a CEO/chair split.
“Solomon's foray into the consumer realm has been met with missteps and steep losses, " ISS wrote Wednesday, according to Reuters.
The bank backed off from its consumer-banking ambitions in 2022 and reemphasized its investment-banking bread and butter.
"Our board’s governance committee needs the flexibility to determine the best structure for our firm," a Goldman spokesperson said Thursday in a statement seen by Reuters. "They have made clear that a strong lead independent director, alongside the chairman-CEO role, is the most effective."
Tony Carideo, president of corporate elections specialist The Carideo Group, said investors are wary of potential conflicts of interest connected to having one person hold both roles.
"It's probably incrementally positive to separate those roles," Mark Narron, a senior director at Fitch Ratings, told Reuters.
Banks aren’t the only finance companies seeing pushback over a structure that marries the CEO and chair roles. Activist investor Bluebell Capital Partners called out asset manager BlackRock on Thursday for giving dual powers to co-founder Larry Fink.
“There is an inherent conflict of interest for a CEO to act as her/his own oversight as chair,” Bluebell said in a proxy filing seen by Bloomberg. “The lack of independent oversight within BlackRock’s board can be evidenced by the numerous contradictions and inconsistencies between BlackRock’s ESG strategy and its implementation.”
