Dive Brief:

• Goldman Sachs is awarding one-time stock-based incentives to its two top executives to “ensure leadership continuity” for at least the next five years, the bank said Friday in a Securities and Exchange Commission (SEC) filing.
• The bank gave CEO David Solomon 73,264 restricted stock units that, based on a Goldman trading value of $409.48, would net him roughly $30 million in October 2026. However, if the stock price were to climb to $717 — given a $2 quarterly dividend — the bonus would top out at more than $50 million, according to The Wall Street Journal. John Waldron, the bank’s president and chief operating officer, received 48,843 stock units Friday, now worth about $20 million. But if Goldman’s stock price reaches $717 per share in October 2026, Waldron would stand to get more than $35 million, the publication reported.
• The $409.48 figure stems from the bank’s average closing stock price between Oct. 15 and Oct. 21. A jump to $717 per share would represent a gain of around 75% — which is doable, if Goldman performs over the next five years at the level it has in the past three. The bank’s stock price has increased 80% since Solomon took over Goldman’s top role in October 2018, according to the Financial Times.

Dive Insight:

Solomon wouldn’t be the only big-bank CEO to lock in to such a potentially lucrative award this year. JPMorgan Chase gave its top executive, Jamie Dimon, a "special award" of 1.5 million share options in July. The incentive would be worth about $50 million, provided Dimon holds the shares until July 2031. However, JPMorgan’s board can take away up to half of those options in the first five years if the bank’s performance is "unsatisfactory for a sustained period of time," if the bank’s annual profit turns negative — with the exception of certain items — or if the bank’s business units don’t meet certain goals.

The Goldman incentive comes roughly nine months after the bank cut Solomon’s annual compensation by 36% from $27.5 million in 2019 to $17.5 million in 2020. The difference represents a $10 million clawback as part of a penalty for Goldman's involvement in the 1MDB scandal, much of which pre-dates Solomon’s tenure atop the bank. The bank slashed Waldron’s compensation to $18.5 million in 2020 in connection to the 1MDB penalty — representing a $6 million clawback.

The $17.5 million figure made Solomon technically the lowest-paid CEO of the U.S.’s six largest banks in 2020 — although hardly the only one to see a pay cut. Citi slashed former CEO Michael Corbat’s 2020 compensation by 20.7%, to $19 million, to reflect his performance as regulators slapped that bank with a $400 million penalty over risk and control deficiencies. Wells Fargo cut CEO Charlie Scharf’s 2020 compensation by 12% to just over $20.3 million, citing the bank’s financial results for the year. And Bank of America trimmed CEO Brian Moynihan’s 2020 compensation by 7.5% to $24.5 million.

However, the first nine months of 2021 have been record-breakers for Goldman Sachs — as the bank has posted revenue that surpasses any previous 12-month period for the bank — driven by trading activity and a spike in mergers and acquisitions.

In its filing Friday, the bank acknowledged it wants to “enhance retention in response to the rapidly increasing war for talent in the current environment.”

Goldman has seen a raft executive departures this year, perhaps more than other banks its size. CFO Stephen Scherr announced last month he is leaving the bank at the end of January. The bank’s asset-management co-head, general counsel, communications chief and head of diversity have also announced their departure since March.

Credit Suisse in July hired away two 24-year Goldman veterans, Deputy Chief Risk Officer David Wildermuth, and a leading tech executive, Joanne Hannaford. 

Perhaps hardest hit within Goldman has been its consumer bank, Marcus. The executive who had led it from its inception until 2020, Harit Talwar, said he would leave the bank this month. Talwar’s one-time successor, Omer Ismail, left Goldman in February, just months after taking over day-to-day operations at Marcus, to take a role at Walmart’s burgeoning fin tech start-up. Marcus’ head of large partnerships, David Stark, followed. Two Marcus executives left for JPMorgan Chase this spring: Sonali Divilek, head of product, in April; and CFO Sherry Ann Mohan, the following month.

The bank also served as the jumping-off point for a raging industrywide debate on working conditions of junior analysts. A group of 13 Goldman junior bankers made a presentation to managers at the bank detailing 100-hour workweeks, a damning report that prompted competitors — and eventually, Goldman, too — to boost pay and draw better-defined boundaries around work expectations. 

Rivals’ performance also comes into play in the bonus announced Friday. While half of the incentive’s value would derive from gains in the Goldman’s stock price, another half would vary based on stock performance compared to a peer group composed of JPMorgan Chase, Morgan Stanley, Bank of America, Citi, Wells Fargo and BNY Mellon, the bank said.