Goldman Sachs CEO David Michael Solomon attends the debate 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 pay cut by just over a third by 2020 as part of the punishment for the bank’s role in the 1MDB scandal.
The bank, which recorded its highest revenue in more than a decade last year despite the coronavirus pandemic, has admitted to committing mischief during its time working for a now-famous Malaysian government development fund called 1Malaysia Development Berhad, or 1MDB.
The pay cut for Solomon, which accounts for approximately 36% of his annual salary, is $ 10 million, which reflects previous sanctions imposed on the bank and not Solomon’s own conduct.
“Although none of Mr Solomon, Mr Waldron or Mr Scherr was involved or aware of the company’s involvement in any illicit activity at the time the company entered into 1MDB bond transactions , the Board considers the 1MDB issue to be an institutional failure, incompatible with the high expectations it has for the company, ”a Goldman Sachs stock statement read from January 26 . Solomon has been the bank’s CEO since 2018.
The compensation reductions also apply to John Waldron, president and chief operating officer of Goldman, and Stephen Scherr, chief financial officer of Goldman, who received a $ 7 million salary reduction. The cuts are part of a broader effort by the bank to recover $ 174 million in pay from current and current executives as part of its sanctions.
The moves are “part of the Council’s broader determination on the compensation of certain past and present members of senior management in light of government findings and regulatory investigations and the magnitude of the government’s agreement. the company and regulatory issues related to 1Malaysia Development Berhad (“1MDB”), ”the SEC file wrote.
Solomon’s salary package consists of $ 2 million in base salary, a $ 4.65 million cash bonus and $ 10.85 million in compensation in the form of shares, which is based on the performance of the bench. His pay for 2020 was $ 17.5 million instead of the $ 27.5 million he received in 2019, although last year turned out to be a flawless year for the bank, with revenues of $ 44.56 million. of dollars, the highest since 2009.
The 1 MBD scandal, which has been under investigation since 2015, was one of the big blemishes on Goldman Sachs’ reputation at a time when the US bank was still dealing with its image problems over criminal charges. of poor asset sales during the 2008-09 financial crisis. .
Prosecutors accused senior bank executives of ignoring fraud and bribery in search of hundreds of millions of dollars in fees for selling bonds to raise money for the fund while working for the then Malaysian Prime Minister Najib Razak and 1MDB adviser Jho Low, who is accused of planning the fraud.
Najib destroyed the $ 700 million fund, which went to the prime minister’s private bank account, and proceeds from the sale of bonds were used to pay bribes to Malaysian and foreign officials. ‘Middle East.
Goldman, in October, pleaded guilty to his role in the scandal and agreed to pay nearly $ 3 billion to government authorities in four countries to end U.S. investigations.
Two Goldman Sachs bankers have been criminally charged, while Najib was sentenced to 12 years in prison and fined $ 210 million ($ 51 million). Jho Low remains at large and is believed to be living in China, despite a red Interpol warning sent to him by Malaysian authorities. The scandal was reported to have cost Goldman Sachs more than $ 5 billion.