David Michael Solomon, CEO of Goldman Sachs, attends a discussion on “Women Entrepreneurs Through Finance and Markets” at the World Bank on October 18, 2019 in Washington, DC.
Olivier Douliery | AFP | Getty Images
Goldman Sachs CEO David Solomon saw his 2020 wage cut by just over a third as part of a punishment for the bank’s role in the 1MDB scandal.
The bank, which posted its highest revenue in over a decade despite the coronavirus pandemic last year, has admitted to guilty of misconduct while serving with a now infamous development fund run by the Malaysian government called 1Malaysia Development Berhad (1MDB).
The $ 10 million wage cut for Solomon, roughly 36% of his annual salary, reflects previous penalties imposed on the bank rather than Solomon’s own behavior.
“While at the time of the 1MDB loan dealings, none of Messrs Solomon, Waldron, or Scherr was involved in or aware of the Company’s involvement in illegal activities, the Board of Directors views the 1MDB matter as an institutional failure that is not up to date What is compatible is expectations of the company, “stated a security notification from Goldman Sachs on January 26th. Solomon has been CEO of the bank since 2018.
The pay cuts also apply to John Waldron, President and Chief Operating Officer of Goldman, and Stephen Scherr, Goldman’s chief financial officer, who each received a $ 7 million pay cut. The cuts are part of a broader effort by the bank to reclaim $ 174 million in salaries for former and current executives as part of its sentences.
The moves are “part of the broader determination of the Board of Directors regarding the compensation of certain past and present senior executives in light of the results of the regulatory and regulatory investigations and the extent to which the Company has resolved government and regulatory issues related to 1Malaysia Development Berhad.” (“1MDB”) “wrote the SEC filing.
Solomon’s salary package consists of a base salary of $ 2 million, a cash bonus of $ 4.65 million, and stock compensation of $ 10.85 million based on the bank’s performance. His salary for 2020 was then $ 17.5 million instead of the $ 27.5 million he received in 2019, although last year turned out to be a busy year for the bank, with revenues of $ 44.56 billion. Dollar, its highest since 2009.
The 1MBD scandal, which has been investigated since 2015, has been one of the biggest drag on Goldman Sachs’ reputation at a time when the American bank was grappling with its image problems over criminal allegations of poor asset sales during the 2008-09 financial crisis .
Prosecutors at the time accused the bank’s executives of overlooking fraud and bribery in order to collect hundreds of millions of dollars in fees for the sale of bonds to raise money for the fund while serving for then-Prime Minister of Malaysia , Najib Razak, and 1MDB consultant Jho Low are accused of mastering the scam.
$ 700 million of the fund was stolen from Najib, cash that flowed into the prime minister’s private bank account, and the proceeds from bond sales were reportedly used to pay bribes to officials in Malaysia and the Middle East.
Goldman pleaded guilty to his role in the scandal in October and agreed to pay nearly $ 3 billion to government agencies in four countries to end the U.S. investigation.
Two Goldman Sachs bankers were prosecuted while Najib was sentenced to 12 years in prison and fined 210 million Malaysian ringgits (US $ 51 million). Jho Low remains at large and is believed to be living in China despite an Interpol Red Notice issued for him by the Malaysian authorities. The scandal is said to have cost Goldman Sachs more than $ 5 billion.
