Some commentators have described David Solomon’s extra remuneration for 2024 as a “special bonus”. Others have called it “excessive”. Last week Goldman Sachs submitted plans to give $80 million in bonuses each to both CEO David Solomon and President John Waldron.
In the case of David Solomon, there is some argument to state the bonus is due to him. Albeit he was paid more than any other Wall Street CEO for 2024, $39 million. In the case of President and COO John Waldron, the argument is less convincing.
Ted Pick at Morgan Stanley received $34 million for 2024. Jamie Dimon from JP Morgan was paid $38 million. Bank of America’s Brian Moynihan received $35 million. Interestingly, Jane Fraser from Citigroup received $34.5 million, bringing her salary closer to other Wall Street CEOs.
Why is Goldman Sachs Paying Out Such Large Bonuses?
In January we wrote about soaring investment banking revenues in the U.S. In the article we highlighted how Goldman Sachs had made substantial profits in 2024, leading to a high dividend payout compared to previous years. All this coupled with a stellar performance on the New York Stock Exchange which saw share price rise from $388 to $584 through 2024 (TradingView).
This justifies a call for a pay rise for Solomon, but does it justify the bonus? One might remember the terrible tale of Marcus by Goldman Sachs. The struggles of Marcus occurred during a period of substantial growth in retail banking at JP Morgan’s Chase. It raised eyebrows across Wall Street and put Solomon’s job on the line for a short period. Fast forward a few years and things have changed. The challenges banks face today are different.
The problem with the bonus payout for Waldron is one related to the retention of talent. We recently reported how Jamie Dimon’s successor in waiting decided to call it a day at JP Morgan. Opening a big headache for the CEO of the largest bank in the U.S. What is happening in the case of Waldron may be related. In an endeavour to keep hold of the COO and President, Goldman Sachs may be ‘throwing the kitchen sink’ at the problem. As Waldron is 63, this remains speculation.
Kick Back from the Market
On Monday a proxy adviser for Institutional Shareholder Services wrote about the incentives for Goldman Sachs leadership team. In the note the decision to incentivize Solomon and Waldron was criticized. The incentives “lack rigorous, pre-set performance criteria, which is particularly concerning for off-cycle awards with such large values.” The board of Goldman Sachs was accused of “poor practice” for adding new incentives before a prior program finished.
If approved the bonuses will escalate another debate about bankers’ bonuses and bankers’ salaries that hasn’t been seen since before the pandemic. All this will clarify on the 23rd of April when shareholders of Goldman Sachs meet. Will Goldman Sachs defense of needing to nurture talent be enough to entice shareholders into spending so much on bonusses?
Author: Andy Samu
See Also:
Should DJ Solomon be paid $35 million for his work in 2021? | Disruption Banking
Investment Banking Revenues Soar as U.S. banks report 2024 revenues | Disruption Banking
What happened to Marcus by Goldman Sachs? | Disruption Banking
Who Will Succeed Jamie Dimon as JP Morgan CEO? | Disruption Banking
