Glass Lewis criticises Goldman’s ‘egregious’ executive bonuses

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Goldman Sachs’ bonuses to chief executive David Solomon and president John Waldron worth $80mn apiece “raise significant concerns” and should be rejected by the bank’s shareholders, advisory firm Glass Lewis has recommended.

In a report published late on Friday, the proxy adviser said the duo’s awards, which the bank announced in January, were “further exacerbated by their structure, with the grants deviating from the company’s historical use of performance-based equity awards”.

The bonuses will be paid entirely in stock and are not tied to performance conditions, the firm said.

While “media headlines” depicted a “high level of poaching” experienced at the bank, shareholders had received mostly “boilerplate language” about the need for the pay, Glass Lewis said.

“The absence of any disclosure surrounding these elements of such a substantial award is egregious and, on that basis alone, would warrant a vote against this proposal this year,” it said in the report.

Goldman granted the five-year retention bonuses to ensure that their top two executives remained at the bank. The award for Waldron cemented the popular view among Wall Street observers that he is Solomon’s most likely eventual successor.

The bonuses are separate to the annual compensation for Solomon and Waldron, which last year totalled $39mn and $38mn respectively. They also dwarfed recent awards paid to the chief executives of rivals JPMorgan and Morgan Stanley.

Inside Goldman, there have been concerns for weeks that investors would reject the so-called say on pay vote at the investment bank’s annual general meeting on April 23 in Dallas, according to people familiar with the matter.

Goldman, whose top investors include Vanguard, BlackRock and State Street, said in a statement: “Competition for our talent is fierce. The board took action to retain our current leadership team, to sustain our firm’s momentum and maintain a strong succession plan. A 100 per cent stock based grant is fully aligned with long-term shareholder value creation.”

The advisory vote, adopted as part of the Dodd-Frank financial regulation reforms, is nonbinding. But if shareholders voted no, it would represent a public rebuke for the bank.

At US banks, it is rare for investors to vote against compensation plans; in recent years, only JPMorgan Chase has faced such a rebellion. Shareholders were frustrated by a special award projected to be worth about $50mn for chief executive Jamie Dimon in 2022. JPMorgan subsequently said it would not give Dimon special awards in the future.

At Goldman Sachs, shareholder support for its executive pay awards dipped to 86 per cent in 2024, from 94 per cent the year before.

Glass Lewis also warned shareholders about the new carried interest pay plan for executives. The complexity of the plan makes it harder for shareholders to assess pay arrangements before bonuses are paid out, the firm said.