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Goldman Sachs Group cut its chief executive David Solomon’s compensation by 29 percent to $25 million by 2022, the bank said in a filing Friday, just as the company laid off more than 3,000 workers.
Solomon’s pay includes a base salary of $2 million, a cash bonus of $6.9 million and $16.1 million in restricted stock. She was paid $35 million by 2021.
The bank’s compensation committee cited the “challenging operating environment” as a factor in deciding Solomon’s pay, according to the filing.
He also highlighted his ‘strong individual performance and effective leadership’.
Goldman Sachs began cutting 3,200 jobs on Wednesday as CEO David Solomon (pictured) looks to cut spending as banks recover from a tough 2022
Morgan Stanley CEO James Gorman’s compensation, left, is down 10 percent to $31.5 million for 2022. At JPMorgan Chase, Jamie Dimon’s pay is flat at $34.5 million for 2022
Soloman’s pay cut was the biggest yet among CEOs of the biggest US banks, whose companies suffered a deal drought after a 2021 blockbuster.
Morgan Stanley CEO James Gorman’s compensation was cut 10 percent to $31.5 million for 2022. At JPMorgan Chase, Jamie Dimon’s pay was flat at $34.5 million for 2022.
Goldman’s fourth-quarter profit fell 66% to $1.33 billion as investment banking tanked and its consumer business lost money. The shares fell more than 6 percent when the bank reported earnings on January 17.
Solomon sat down for an interview in Davos, Switzerland, last week in which he highlighted the company’s successes and downplayed its mistakes. But skeptical shareholders want to know more about the Wall Street giant’s plans.
‘Good companies should invest and innovate and try new things. And by the way, when you do, you won’t always get it right,” Solomon said.
Banks generated nearly $71 billion in investment banking revenue in the US last year, according to Dealogic. Investment banking revenue in the United States is expected to have fallen more than 50 percent from last year.
Pictured: Employees at Goldman Sachs’ New York office last week as the first round of layoffs began. Employees were reportedly fired in short meetings and without bonuses.
Last year, the influential proxy advisory firm Glass Lewis urged shareholders to vote against pay packages that included one-time stock grants for Solomon and John Waldron, the company’s chairman.
His compensation was later approved by investors.
Earlier this month, Goldman Sachs began cutting 3,200 jobs, laying off workers at its New York, London and Hong Kong offices in just 30 minutes.
When the mass layoffs began, many employees were laid off without even receiving bonuses for their work in 2022.
Employees were fired via meetings and phone calls, with their office credentials deactivated as they were escorted out of the buildings. The company will also mail personal items to laid-off workers who were not in the office.
The investment banking giant is about to lay off about 6.5 percent of its 49,000 workforce as Solomon seeks to cut spending amid shrinking revenue.
US-based investment banking firm embarks on mission to cut costs at branches around the world (New York headquarters shown)
“We know this is a difficult time for people leaving the company,” Goldman Sachs said in a statement. ‘We are grateful for the contributions of all our people and are providing support to ease their transitions.
“Our focus now is to right-size the company for the opportunities that lie ahead in a challenging macroeconomic environment.”
Sources told the Times that while the bonuses have been withheld, many of the sacked senior managing directors will still be paid until the end of January, after which they will receive a three-month severance package.
As for the younger employees, those at the vice president level and below, they were offered just two months’ severance, the sources said.
Some Goldman Sachs employees have said the lack of bonuses this year could be a ploy by the bank to get more workers to quit, allowing them to avoid severance pay and cut more jobs.
Goldman Sachs cut about 3,200 jobs last week, after chief executive David Solomon (above) warned of the layoffs in a memo last month.
About a third of the layoffs came from the investment banking and global markets division, and some of the laid off employees also relied on work for their visas.
The cuts come after the banking giant pushed to increase its workforce in 2020 following the Covid-19 pandemic.
The company has been in something of a hiring spree since Solomon took over in 2018, when Goldman Sachs retained 36,300 employee positions.
The workforce then increased to 38,300 in 2019 and 40,500 the following year.
After reaching 43,900 employees in 2021, the number increased by more than 5,000, one of the biggest spikes in the bank’s recent history.
Even if Goldman Sachs cuts its workforce by 3,200 employees, it would still have more employees than in 2021
However, a dramatic slowdown in M&A trading has forced Goldman to cut costs amid higher interest rates and a volatile global market.
Last month, CEO Solomon reportedly sent a memo to staff by the end of the year, warning that headcount would be downsized in the new year.
“We are conducting a careful review and, while discussions are still ongoing, we anticipate that our reduction in staff will take place in the first half of January,” Solomon said in the memo, according to Bloomberg.
‘There are a variety of factors affecting the business outlook, including tightening monetary conditions that are slowing economic activity. For our leadership team, the focus is on preparing the company to weather these headwinds,” he added.
Goldman Sachs had significantly increased its workforce since 2020 as it sought growth opportunities following the pandemic.
However, institutional banks have been affected by a significant slowdown in activity in recent months due to the volatility of global financial markets.
Annual bonus season will kick off this week when JP Morgan, Citi and Bank of America report their results for last year.