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Goldman Sachs has boosted chief executive David Solomon’s pay by more than a quarter and set up $80mn retention plans for him and president John Waldron in an effort to ensure the pair remain at the top of the bank.
The Wall Street bank, which earlier this week reported one of its best years since the 2008 financial crisis, said it would increase Solomon’s pay for 2024 by 26 per cent to $39mn, according to regulatory filings.
Solomon has fought back against internal unrest over the past couple of years after Goldman’s failed foray into consumer banking, but the board and most investors solidly backed his leadership and his decision to elevate the importance of asset and wealth management, including alternatives.
Waldron, meanwhile, had talked briefly to private capital firm Apollo about a top role and received approaches from other groups, which crystallised Goldman’s determination to keep him, three people familiar with the matter told the Financial Times.
“The firm is delivering strong performance and the board is determined to maintain our momentum, ensure stability and keep in place a solid succession plan,” Goldman said.
The size of Solomon and Waldron’s retention grants dwarfs even the $50mn five-year package that JPMorgan Chase awarded to Jamie Dimon in 2021. Morgan Stanley last year set up $20mn pots for new chief executive Ted Pick and the two men he competed against for the top job.
Goldman also for the first time handed Solomon and Waldron, as well as other top executives, bonuses based on the performance of its alternative asset funds in addition to stock and cash. It is a signal that the bank is starting to pay its senior leaders in the same way as leading private equity firms.
The stock component of the annual pay package vests based on meeting targets for Goldman’s share price and return on equity, while there is also a component tied to the bank’s funds based on their performance, a kind of pay known as “carry”.
Most banks and traditional asset managers use carry to reward their fund managers, but it is very unusual to include it in the pay of top executives. Goldman said chief financial officer Denis Coleman and top lawyer Kathryn Ruemmler and others would also be paid this way.
The bank said it was “evolving compensation to enhance the firm’s ability to continue to attract and retain the best talent at a time when the competition for Goldman Sachs talent is especially fierce, including from asset managers and other non-banks”.
Goldman has been losing partners and top executives to asset managers, private capital and trading firms such as TPG, Citadel, Sixth Street and General Atlantic in recent years.
A top Wall Street executive close to Goldman predicted that the big package for Waldron “will be greeted with enthusiasm internally and by their partners. He is well-liked and respected across the industry.”
Additional reporting by Stephen Gandel and James Fontanella-Khan
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