Goldman CEO David Solomon takes $ 10 million pay cut for 1MDB scandal

In October, Goldman agreed to pay nearly $ 3 billion to government officials in four countries to end an investigation into work done for 1MDB, a Malaysian fund that prosecutors say had been used to pay pots -wine to politicians in Malaysia and the Middle East. The bank said at the time it would take a total of $ 174 million in compensation from current and former executives.

Mr Solomon’s salary in 2020 would have been $ 10 million higher had it not been for the actions his board took in response to the 1MDB saga, Goldman said in the filing. His compensation package consisted of a base salary of $ 2 million, a cash bonus of $ 4.65 million and a stock award of $ 10.85 million tied to the bank’s performance over the years. coming years.

Costs and fines related to fallout from the 1MDB scandal have eaten away at what has been a record year for Goldman’s businesses, which has been heavily boosted by the rebound in markets deep in the coronavirus recession. Goldman’s annual revenue of $ 44.56 billion was the highest since 2009.

Other bank chiefs who presided over strong growth last year have been rewarded with big increases. Morgan Stanley paid CEO James Gorman $ 33 million for his work in 2020, an increase of 22%.

John Waldron, president and chief operating officer of Goldman, and Stephen Scherr, chief financial officer of Goldman, saw their 2020 salaries cut by 24% and 31%, respectively. Everyone would have earned $ 7 million more without 1MDB.

The three senior executives were not “involved or aware of the company’s involvement in any illegal activity,” Goldman said in the filing. However, their salary was reduced because the bank’s board of directors viewed the 1MDB scandal as “an institutional failure, incompatible with the high expectations it has for the company”.

Goldman helped raise $ 6.5 billion for 1MDB by selling bonds to investors. Prosecutors alleged that senior executives at Goldman ignored warning signs of fraud in their dealings with 1MDB and Jho Low, an adviser to the fund. Two Goldman bankers have been criminally charged in the scandal.

In total, Goldman’s transactions with 1MDB cost the bank more than $ 5 billion.

Write to Peter Rudegeair at [email protected]