Goldman Sachs Group Inc. cut Chairman and Chief Executive Officer David Solomon’s fiscal 2020 pay by $10 million as a penalty for the bank’s role in 1Malaysia Development Berhad or 1MDB bribery scandal.
In a filing with the U.S. Securities and Exchange Commission, the bank said it has also cut payments of President and Chief Operating Officer John Waldron, and Chief Financial Officer Stephen Scherr by $7 million each.
According to Goldman Sachs’ Compensation Committee of the Board, the latest pay cut for the executives reflect the company’s previously announced decision to reduce 2020 compensation in light of the findings of the government and regulatory investigations and the magnitude of the bank’s settlement of government and regulatory matters relating to 1MDB.
In October last year, the bank had agreed with U.S. Department of Justice to pay about $2.8 billion to close U.S. investigations related to its role in 1MDB scandal.
However, the bank now added that none of Solomon, Waldron or Scherr was involved in or aware of the bank’s participation in any illicit activity at the time the firm arranged the 1MDB bond transactions.
According to the bank, the pay was cut as the Board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the company.
In the year 2020, Solomon’s total annual compensation was $17.5 million, compared to total annual compensation for 2019 of $27.5 million. It consists of an annual base salary of $2,000,000, which remains unchanged from last year, and annual variable compensation of $15.5 million. In this annual variable compensation, 70%, i.e., $10.85 million, was granted in the form of performance-based restricted stock units, with the remainder to be paid in the form of cash.
Waldron’s total annual compensation for 2020 is $18.5 million, down from $24.50 million last year. Scherr’s total annual compensation is $15.50 million, down from $22.5 million a year ago.
The pay cut decision comes as Goldman Sachs has recorded a significant profit in its fourth quarter of $4.36 billion or $12.08 per share that more than doubled from last year, reflecting a surge in investment banking revenues and lower provisions for bad loans. Net revenues for the quarter rose 18 percent from last year to $11.74 billion.
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