Goldman Sachs giving $80 million each to its CEO David Solomon and president John Waldron has drawn criticism from proxy adviser firm Glass Lewis.
The San Francisco-based firm urged investors to reject Goldman’s executive retention bonuses that totaled $160 million, noting each award value is twice either executive’s 2024 total annual compensation and doesn’t align with Goldman executives’ pay and performance, raising “significant concerns” on the executives’ compensation packages.
“Concerns surrounding the Company's continued inability to align pay with performance are exacerbated by the decision to grant excessive retention awards to Messrs. Solomon and Waldron just following the end of the fiscal year,” Glass Lewis said in its report seen by Banking Dive. “While we will review the impact of the additional $160 million on the Company's pay and performance alignment within the full scope of 2025, thus far, the provided discussion regarding the rationale in the proxy statement is far from robust.”
Goldman will hold its annual shareholders meeting on April 23.
The New York-based lender is experiencing its third consecutive year of disconnect between executive pay and performance, according to the Glass Lewis report.
Despite some improvement due to strong 2024 results, concerns persist, Glass Lewis said, particularly considering early 2025 developments, including executive compensation continuing to outpace company performance. Solomon and Waldron received 28% increases in variable compensation and three-year weighted compensation for executives was approximately $115 million compared to the peer median of $70 million. The proxy adviser thinks the misalignment is unlikely to improve.
The executive retention awards raise concerns since they are based on restricted stock units rather than performance-based equity, and despite longer vesting periods, the lack of performance conditions undermines pay-for-performance alignment, the report noted.
Glass Lewis asserted that Goldman lacked robust disclosures regarding its process of granting the bonuses.
“[S]hareholders received largely boilerplate language, leaving the board's process for arriving at the size and structure of the awards largely to the imagination,” the report said.
“Although media headlines have painted a picture regarding the high level of poaching experienced at the Company, the onus is on the Company to clearly articulate this backdrop in relation to the award,” the report continued.
Goldman reportedly offered the five-year retention bonuses to prevent various poaching attempts to lure away Waldron – also the lender’s chief operating officer - who is viewed as a potential successor to Solomon. Waldron was also elevated to Goldman’s board of directors in February.
Solomon’s retention bonus was on top of a pay hike he got that bumped his 2024 salary to $39 million from $31 million a year earlier.
“Competition for our talent is fierce,” a Goldman Sachs spokesperson said in a statement to Bloomberg. “The board took action to retain our current leadership team, to sustain our firm’s momentum and maintain a strong succession plan. A 100% stock-based grant is fully aligned with long-term shareholder value creation.”
Goldman’s CEO compensation package also came under fire last year when Glass Lewis asked shareholders to vote against a move to raise Solomon’s pay for 2023 to $31 million, citing similar “disconnect between performance and compensation.”
Goldman isn’t the only bank to face criticism over its executive pay. Last year, Morgan Stanley was castigated for offering a $20 million bonus to its newly minted CEO, Ted Pick, and two fellow contenders for the top role.
JPMorgan Chase CEO Jamie Dimon has railed against Glass Lewis and its fellow leading proxy adviser, Institutional Shareholder Services, calling out their “undue influence” in shareholder voting. In 2022, 31% of JPMorgan shareholders rejected a $52.6 million payout to Dimon in a nonbinding vote – far below the 90% backing the bank’s pay proposals usually receive.
Dimon again criticized Glass Lewis and ISS earlier this month at a BlackRock retirement summit, The Wall Street Journal reported.
“They are incompetent,” Dimon said, adding, “they should be gone and dead, done with.”
