Goldman Sachs CEO pay drops 30% after profit falls 48% and share price loses 10% in tough 2022

Goldman Sachs CEO David Solomon will take home 30% less pay in in 2022 after a tough year for the investment bank that saw its stock price drop by 10% and its net earnings drop by $10.4 billion from the blockbuster year in 2021.

The bank’s compensation committee praised Solomon’s “effective leadership” and said 2022 ranked as its second-highest full year net revenue in history at $47.4 billion, its second-highest diluted earnings per common share of $30.06 and a return on average common shareholders equity of 10.2%.

Goldman Sachs
said in a filing that Solomon will receive $25 million for his work in 2022, compared to $35 million in 2021, according to a filing on Friday.

The pay cut marks the latest in a series of tough development for Goldman including a cover story in the Economist with the headline, “Goldman Sags”.

For 2022, Solomon’s annual base salary remains at $2 million, plus $23 million in variable compensation. About 70% or $16.1 mil of the variable compensation comes in the form of performance-based restrictive stock units (PSUs). These PSUs reflect the value of Solomon’s ongoing performance metrics. The remaining 30% of Solomon’s variable compensation is in cash.

The bank said its compensation committee was guided in its determination of Solomon’s variable compensation by a number of factors including identified financial performance metrics as well as non-financial factors such as client orientation, risk management and a people strategy scorecard.

The compensation committee also considered the firm’s 2022 performance on an absolute basis and relative to peer results.

“The committee also took into account the firm’s continued progress in its strategic evolution as well as Mr. Solomon’s strong individual performance and effective leadership,” the bank said. “These factors were considered in the context of a challenging operating environment.”

Goldman stock fell 10.2% in 2022 while the Dow Jones Industrial Average
dropped 8.8%. In 2021, Goldman stock rallied 45.1% and the Dow Jones Industrial Average rose 18.7%.

Goldman Sachs’s earnings available to common shareholders fell to $10.764 billion in 2022, down from $21.15 billion in 2021.

Reports have surfaced recently that bonuses at Goldman Sachs among junior bankers are expected to drop by about 40%.

Solomon remains one of the more high profile executives on Wall Street, along with JPMorgan Chase & Co.
CEO Jamie Dimon, who heads up the largest bank in the U.S.

JPMorgan Chase & Co.’s board heeded an outcry from shareholders about Chairman and Chief Executive Jamie Dimon’s compensation, which in the past has included more than $50 million in “special awards,” leaving the billionaire executive with only his multimillion-dollar base salary.

In a Securities and Exchange Commission filing on Jan. 19, JP Morgan’s board said it would not pay a “special award” granted to Dimon in 2022.

Dimon is taking home the same $34.5 million salary for 2022, but his total pay will drop from $84.4 million in 2021 when he earned $52.6 million in the form of an options bonus.

This month, Goldman Sachs laid off as many as 3,200 employees in its largest job reduction since the global financial crisis of 2007-08.

Also Read: No more ‘special awards’ for JPMorgan CEO Jamie Dimon, board decides

Also Read: Goldman Sachs may cut 3,200 jobs: report

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