Goldman Sachs CEO David Solomon gets $ 10million pay cut on 1MB

Goldman Sachs CEO David Solomon has seen his compensation cut by just over a third for 2020 as part of a punishment for the bank’s role in the 1MDB scandal.

The bank, which recorded its highest revenue for more than a decade last year despite the coronavirus pandemic, admitted to doing wrongdoing while working for a now infamous Malaysian government development fund called 1Malaysia Development Berhad, or 1MDB.

Solomon’s pay cut, which to $ 10 million is roughly 36% of his annual salary, reflects previous sanctions imposed on the bank and not Solomon’s own conduct.

“Although none of Messrs. Solomon, Waldron, or Scherr were involved in or aware of the company’s involvement in any illegal activity at the time the company arranged the 1MDB bond transactions, the Conseil considers the 1MDB affair as an institutional failure, incompatible with the high expectations it has for the company, ”reads a file from Goldman Sachs dated January 26. 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, chief financial officer of Goldman, who each received a pay cut of $ 7 million. The cuts are part of a larger effort by the bank to recoup $ 174 million in salaries from former and current executives under its sanctions.

These measures are “part of the Board’s broader determination regarding the compensation of certain former and current members of senior management in light of the findings of government and regulatory investigations and the extent of the company’s resolution of government and regulatory matters. relating to 1Malaysia Development Berhad (“1MDB”), “writes the SEC filing.

Solomon’s total compensation includes $ 2 million in base salary, 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, despite the fact that last year proved to be an exceptional year for the bank, reaching a revenue of $ 44.56 billion, its highest since 2009.

The 1MBD scandal, which has still been investigated since 2015, was one of the biggest stains on Goldman Sachs’ reputation at a time when the US bank was still grappling with its image problems following criminal allegations of poor asset sales during the 2008-09 financial crisis. .

Prosecutors accused the bank’s senior executives at the time of neglecting fraud and corruption in pursuing hundreds of millions of dollars in fees for selling bonds to raise money for the fund while working for then Malaysian Prime Minister Najib Razak and 1MDB adviser Jho Low, who is accused of orchestrating the fraud.

The fund was stolen by Najib to the tune of $ 700 million, in cash that went to the prime minister’s private bank account, and the proceeds from bond sales were reportedly used to pay bribes to Malaysian and Middle Eastern officials.

Goldman pleaded guilty in October to his role in the scandal and agreed to pay nearly $ 3 billion to government officials in four countries to shut down US investigations.

Two Goldman Sachs bankers were charged with criminal charges, while Najib was sentenced to 12 years in prison and fined 210 million Malaysian ringgits ($ 51 million). Jho Low is still at large and is believed to be living in China, despite an Interpol red notice sent to him by Malaysian authorities. The scandal is said to have cost Goldman Sachs more than $ 5 billion.