Glass Lewis, an advisory firm, has recommended that shareholders of Goldman Sachs reject the proposed $80 million bonuses for CEO David Solomon and President John Waldron. The firm raised concerns over these awards, asserting that they deviate from Goldman Sachs’ historical practice of granting performance-based equity awards.
According to a report published late on Friday, Glass Lewis criticized the structure of these bonuses, noting that they are to be paid entirely in stock and are not linked to performance conditions. The advisory firm highlighted that while media reports have suggested a high level of staff poaching at Goldman Sachs, the bank has provided shareholders with limited justifications for these substantial bonuses.
The firm emphasized that the lack of transparency regarding the components of these awards is problematic and sufficient reason for shareholders to vote against the proposal. Goldman Sachs granted the five-year retention bonuses in part to ensure that Solomon and Waldron remain with the bank, with Waldron seen by many as a likely successor to Solomon in the future.
These bonuses are separate from Solomon’s and Waldron’s annual compensation, which was $39 million and $38 million, respectively, last year. These figures surpass the recent compensation awarded to the CEOs of other major banks such as JPMorgan and Morgan Stanley.
Within Goldman Sachs, there have been concerns that the annual general meeting on April 23 in Dallas may see shareholders reject the “say on pay” vote, according to sources familiar with the situation. The firm’s significant investors include Vanguard, BlackRock, and State Street, who have been informed by Goldman that the bonuses were part of efforts to retain top leadership, sustain the firm’s momentum, and ensure a robust succession plan. The bank asserted that a purely stock-based grant is aligned with long-term shareholder value creation.
Though the advisory vote, a component of the Dodd-Frank financial regulation reforms, is nonbinding, a shareholder rejection would signal public disapproval of Goldman Sachs’ compensation plans. Historically, it is rare for U.S. bank investors to oppose compensation proposals. JPMorgan Chase is one exception, having faced a shareholder backlash against a special award for CEO Jamie Dimon last year.
Support for executive pay awards at Goldman Sachs dropped to 86% in 2024 from 94% the previous year. Glass Lewis also cautioned shareholders about a new carried interest pay plan for executives, indicating that its complexity makes it challenging for shareholders to evaluate pay arrangements before bonuses are disbursed.
