Solomon Takes $10 Million Pay Cut for 1MDB Scandal -- Update
27 January 2021 - 11:40AM
Dow Jones News
By Peter Rudegeair
Goldman Sachs Group Inc. slashed Chief Executive David Solomon's
2020 pay by 36%, punishment for the bank's admission last year that
it broke U.S. laws in its dealings with an investment fund at the
heart of a global corruption ring.
Mr. Solomon received a $17.5 million compensation package for
2020, down from the $27.5 million he got for 2019, according to a
securities filing on Tuesday.
In October, Goldman agreed to pay nearly $3 billion to
government officials in four countries to end an investigation into
work it performed for 1MDB, a Malaysian fund that prosecutors had
alleged was used to pay bribes to politicians in Malaysia and the
Middle East. The bank said at the time that it would take a total
of $174 million in compensation from current and former
executives.
Mr. Solomon's 2020 pay would have been $10 million higher but
for the actions its board of directors took in response to the 1MDB
saga, Goldman said in the filing. His compensation package
consisted of a $2 million base salary, a $4.65 million cash bonus
and a $10.85 million stock award that is tied to how well the bank
performs over the next few years.
Costs and fines related to the fallout from the 1MDB scandal
took a bite out of what was a banner year for Goldman's businesses,
which got a big boost from the markets' bounceback from the depths
of the coronavirus recession. Annual revenue of $44.56 billion was
Goldman's highest since 2009.
Other bank chiefs that presided over strong growth last year
were rewarded with big raises. Morgan Stanley paid CEO James Gorman
$33 million for his work in 2020, an increase of 22%.
John Waldron, Goldman's president and chief operating officer,
and Stephen Scherr, Goldman's finance chief, saw their 2020 pay cut
by 24% and 31%, respectively. Each would have earned $7 million
more but for 1MDB.
The three top executives weren't "involved in or aware of the
firm's participation in any illicit activity," Goldman said in the
filing. However, their pay was reduced because the bank's board
viewed the 1MDB scandal as "an institutional failure, inconsistent
with the high expectations it has for the firm."
Goldman helped raise $6.5 billion for 1MDB by selling bonds to
investors. Prosecutors alleged that senior Goldman executives
ignored warning signs of fraud in their dealings with 1MDB and Jho
Low, an adviser to the fund. Two Goldman bankers have been
criminally charged in the scandal.
All told, Goldman's dealings with 1MDB cost the bank more than
$5 billion.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com
(END) Dow Jones Newswires
January 26, 2021 19:25 ET (00:25 GMT)
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