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The decision is destined, at the very least, to cause discussion. At the end of a year in which net profit fell by 24%, the investment bank Goldman Sachs decided to raise CEO David Solomon’s annual salary to $31 million with an increase which, ironically, is precisely by 24%.
Strategic reorientation
The board justified the increase in the various variable bonuses with the success of the bank’s strategic reorientation action, downsizing the retail banking projects. Solomon, who earned 25 million in 2022, will receive 31 million in 2023, divided as follows: 2 million basic salary to which is added a cash bonus of 8.7 million and a bonus in shares of 20.3 million.
The increase in remuneration decided for the CEO of Goldman Sachs is much higher than that of JP Morgan number one Jamie Dimon (+4.3% to 36 million), who last year increased the group’s profits by 33% of the US banking giant reaching a new record of 49.6 billion dollars.
To the controversy
In the case of Goldman Sachs, however, the 2023 net profit was the lowest since 2019, with a return on capital of 7.5% which is approximately half that of its best competitors. The controversy that is rising on Wall Street over Solomon’s salary increase can also be explained by the fact that in 2023, in addition to recording declining profits, the bank has cut thousands of jobs to contain costs given the temporary contraction of the investment banking market.
The passion for music
But the Goldman Sachs board has total faith in Solomon, as already demonstrated on several occasions over the last two years when it defended the banker from those – even among the bank’s partners – calling for his removal. Among the reasons (or pretexts) for the criticism of his work, there was also the accusation that the eclectic 62-year-old banker dedicated little time to work in the office because he was distracted by his musical hobby. Solomon is a passionate DJ (known by his stage name D-sol) and has performed publicly at festivals and events for years. To end the controversy over excessive work distractions, fueled largely by those within the bank who do not share the strategy, last year Solomon officially announced that he would give up public performances as a DJ. But now the controversy about him is destined to reignite due to the increase in salary. More than the internal grumblings, this time it will be the criticisms that may arrive at the meeting from shareholders and investors that will count.