By Zilber
Goldman Sachs CEO David Solomon got a 24% pay bump in 2023 – earning $31 million in compensation – despite the Wall Street giant reporting its worst annual profit numbers in four years.
Solomon, who has consolidated power by winning the backing of the board amid talk of succession, received a $2 million base salary, unchanged from the previous year, a bonus of $8.7 million in cash and $20.3 million in performance-linked stock, according to regulatory filings by Goldman on Friday.
His total payout spiked from $25 million in 2022 – even though the firm posted a 24% decline in net profit last year as Goldman suffered from a slowdown in investment banking activity that led to thousands of job cuts.
The bank also had to take a massive write-off over its ill-fated foray into retail banking.
Nevertheless, Solomon’s 2023 pay bump was higher than his main Wall Street rivals, though his windfall for the year placed him behind both Morgan Stanley CEO Jamie Dimon and outgoing Morgan Stanley boss James Gorman.
Dimon raked in $36 million last year – a 4.3% spike from 2022 – while Gorman, who stepped down in December, took home $37 million, a 17% increase.
“The Board recognized David’s leadership directing the firm – especially in making the tough decisions to narrow our focus, to swiftly execute the strategy, and to continue to deliver results for shareholders,” a Goldman Sachs spokesperson told.
Goldman shares were was down slightly Friday, falling 0.20% to close at $384.
Solomon was bombarded by negative headlines that included reported grumbling among rank-and-file who were said to be irked by his management style, as well as his moonlighting as a DJ.
The bank reported net income of $8.5 billion for 2023 – the lowest level since 2019, a year after Solomon took over from Lloyd Blankfein.
Goldman also reported a return on equity, a key gauge of profitability, of 7.5%, well short of the bank’s target of 14% to 16%.
Much of that was due to Goldman exiting money-losing fintech startup GreenSky, selling it to a consortium of investors led by private equity firm Sixth Street.
In its SEC filing, Goldman’s board praised Solomon for his “decisive leadership in recognizing the need to clarify and simplify the firm’s forward strategy.”
Solomon was also credited with having “steadfast focus on client centricity” as well as a “dedicated commitment to the firm’s culture.”
The board alluded to the sale of GreenSky, which it called a “swift execution on a series of actions that narrowed its strategic focus and strengthened the firm’s platform for 2024 and beyond.”
Its fourth quarter earnings, however, gave the bank solace. Goldman’s year over year profit increased 51% to $2.01 billion, and revenue jumped 7% to $11.32 billion – beating the $10.8 billion analysts had predicted.
Prior to the fourth quarter, Goldman reported eight consecutive quarters of earnings declines.
The New York bank saw modest improvements in its trading and investment management divisions, but saw declines in its important investment banking and advising revenues.
A number of companies held off doing any big deals in 2023, due to the high cost of financing, which means Goldman and the other investment banks had fewer deals to put together.
The biggest lift to Goldman’s results came from an $838 million gain in the investments that the bank had placed in other companies, a reflection of how well the market did in the last three months of 2023.
Investment banking fees were down 16% from 2022, and trading in commodities, currencies and fixed income was down 18%.
Goldman announced last year that it was going wind down its Marcus consumer banking division, and there are reports that it wants to sell off its credit card division.
The bank cut 7% of its workforce last year, and the money it set aside for compensation and benefits this year was up a modest 2%.
