Goldman Sachs Faces Shareholder Backlash Over Executive Pay Packages
Goldman Sachs recently faced a significant backlash from shareholders over its executives’ pay packages, with the lowest level of support in almost a decade. The criticism stemmed from the hefty bonuses awarded to chief executive David Solomon and president John Waldron, each amounting to $80 million.
During a so-called say on pay vote at Goldman’s annual general meeting, only 66 percent of shareholders backed the investment bank’s pay plans, marking the lowest level of support since 2016. This decline in support is particularly notable as it represents the lowest backing for a major US bank’s pay proposals since 2022, when JPMorgan Chase shareholders rebelled against chief executive Jamie Dimon’s remuneration package.
In 2022, only a third of JPMorgan shareholders supported Dimon’s pay, which included a special award of approximately $50 million at the time. Following this backlash, JPMorgan announced that it would refrain from granting its CEO special awards in the future.
Despite the nonbinding nature of the vote at Goldman Sachs, the subdued level of support reflects investor unease with the bank’s decision to award its top two executives retention bonuses more commonly associated with private capital groups.
Proxy advisers Glass Lewis and Institutional Shareholder Services had advised shareholders to vote against the pay plans. Notably, Goldman’s largest shareholders, including Vanguard, BlackRock, and State Street, received five-year retention bonuses in January.
The bonuses for Solomon and Waldron were in addition to their annual pay of $39 million and $38 million, respectively, leading to speculation that Waldron may be positioned to succeed Solomon as chief executive. Glass Lewis criticized the bank for not linking the awards to performance metrics, while Goldman defended the bonuses by asserting that they were necessary to retain top talent and that paying them entirely in stock would align their interests with those of shareholders.
Norway’s sovereign wealth fund, Goldman’s 15th largest shareholder, voted against the pay packages, emphasizing the need for transparency in total remuneration to prevent undesirable outcomes. Similarly, Calstrs, a major Californian pension fund, also opposed Goldman’s pay structure.
The dissent from shareholders underscores the growing scrutiny on executive pay practices in the financial industry and the imperative for companies to align compensation with performance and shareholder interests. As the debate surrounding executive pay continues to evolve, it remains to be seen how Goldman Sachs will address shareholder concerns and adapt its compensation strategies in the future.
