The CEO and two other senior executives are having their 2020 pay slashed. Goldman Sachs said the three figures did not take part in illicit activity but their pay was cut because the 1MDB affair was an "institutional failure."
Goldman Sachs has cut chief executive David Solomon’s 2020 pay by 36 per cent after the US firm admitted last year that it had violated US laws in its dealings with scandal-warped Malaysian fund 1MDB, a news report said.
Solomon received a $17.5 million compensation package for 2020, down from the $27.5 million he received in 2019, according to a securities filing (source: Wall Street Journal, 26 January). Our sister publication, Family Wealth Report, has contacted Goldman Sachs for comment and may update in due course. The bank last October had flagged that such cuts were coming.
In October last year, the firm agreed to pay nearly $3 billion to government officials in four countries to end a probe into work it did for 1MDB. Law enforcement bodies claim that the Malaysian state-created fund 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.
The drama around 1MDB blended fact and fiction; money from the fund was used to finance the Hollywood film, the Wolf of Wall Street, about a stock market fraudster.
The WSJ report said that 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, according to the bank’s 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.
Goldman Sachs recently issued fourth-quarter and full-year figures for 2020.
John Waldron, Goldman’s president and chief operating officer, and Stephen Scherr, Goldman’s finance chief, saw their 2020 pay cut by 24 per cent and 31 per cent, respectively. Each would have earned $7 million more but for 1MDB, the report said.
The firm’s filing said that the three top executives weren’t “involved in or aware of the firm’s participation in any illicit activity,” but their remuneration was cut because the bank’s board viewed the 1MDB scandal as “an institutional failure, inconsistent with the high expectations it has for the firm.”