BREAKINGVIEWS-Goldman follows logical path to bad executive pay

By Stephen Gandel

NEW YORK, April 1 (Reuters Breakingviews) - Goldman Sachs GS.N has followed a reasonable path to an unreasonable outcome. On Tuesday morning, Institutional Shareholder Services became the latest proxy advisory firm to recommended that the investment banks’ shareholders vote to disapprove of top executives’ pay, spotlighting retention bonuses of $80 million each for CEO David Solomon and top lieutenant John Waldron. It follows a similar call to action from Glass Lewis on Friday. The bumper compensation speaks to an ever-fiercer war for talent as asset managers encroach further onto banks’ territory. That makes sense, right up until it results in extra lucre for a boss who seems to be going nowhere.

Waldron is a key executive and seen as a potential heir for the top job. In justifying the fillip, Goldman stressed the need to “maintain a strong succession plan.” Certainly, there are those who would intervene. Buyout shop Apollo Global Management APO.N, which has helped reshape the credit markets once dominated by banks, offered him $500 million to jump ship, according to the Financial Times.

In that context, a mere ten-figure payout might seem a bargain. More curious, though, is Solomon’s bonus, again ostensibly for retention. ISS blasted the paired awards, saying the "magnitude and structure" of the payouts were concerning. Investors' vote is only advisory, but would still be a black eye for the firm.

Goldman in regulatory filings points to a 71% increase in its earnings last year and a 149% rise in the firm’s stock in the past five years. But while that explains Solomon’s $39 million base compensation for 2024, which includes a performance-linked slice, it still doesn’t justify the additional bonus.

After all, while there is clearly interest in picking off Waldron, Solomon, who gutted through bruising headlines and a pay cut three years ago without budging, seems less of a flight risk. Yet, while individual rainmakers might rake in more than the boss in a given year, leaving the sitting CEO under-earning a deputy would make for an awkward look.

It may get yet more uncomfortable, because this threat is not going away. Goldman added alternative asset managers like Apollo and Carlyle CG.O to the "other companies" against which it measures executive pay for the first time this year, an acknowledgement that their incursion into businesses once dominated by banks is here to stay. Setting up a structure that ends up with Solomon earning more for failing to head them off is a poor way to fight back against their talent-poaching.

Follow @stephengandel on X

CONTEXT NEWS

Goldman Sachs earlier in 2025 awarded both its CEO David Solomon and President John Waldron stock-based retention bonuses of $80 million each. That was on top of the $39 million and $38 million that Solomon and Waldron were awarded in regular pay for 2024.

On March 28, proxy advisory firm Glass Lewis recommended that Goldman’s shareholders reject the firm’s pay packages at its upcoming annual meeting, singling out the retention bonuses as “egregious.” Institutional Shareholder Services followed suit on April 1, saying that the payouts lack “rigorous, pre-set performance-vesting criteria.”