Goldman Sachs has ignited a firestorm with its recent decision to award $160 million in retention bonuses to CEO David Solomon and President John Waldron. These eye-popping payouts, $80 million each, have sparked outrage among investors, governance watchdogs, and critics alike, drawing sharp condemnation from Glass Lewis. The proxy advisory firm has urged shareholders to vote against the proposed compensation packages, calling the bonuses excessive and misaligned with the bank’s performance.
The retention awards, which will vest over five years, are 100% stock-based, a move Goldman Sachs claims aligns with long-term shareholder value. However, Glass Lewis isn’t convinced. In a scathing report, the firm blasted the bank’s justification for the bonuses, accusing the bank of failing to provide a robust and detailed explanation in the proxy statement. Glass Lewis has long been critical of Goldman Sachs’s compensation practices, especially its tendency to reward executives handsomely without tying those rewards to measurable performance metrics.
Goldman Sachs, however, stands firm in its defense, arguing that the competitive talent market requires such large bonuses to retain top leaders and ensure the bank’s continued success. The bank insists that the stock-based nature of the bonuses ties the leaders' fortunes to the long-term performance of Goldman Sachs, which, in theory, benefits shareholders. But critics remain skeptical, questioning whether such a hefty payout is truly warranted given the bank’s current performance and the structure of its pay.
This controversy comes amid strong financial performance from Goldman Sachs, which posted net revenues of $53.5 billion in 2024, a significant rise from previous years. The bank’s stock price has also seen an upward trend, although critics argue that the lack of performance-based metrics in these bonuses could undermine the credibility of the bank’s claims.
As the April 2025 annual meeting approaches, all eyes will be on the “say on pay” vote, with shareholders being asked to decide whether to approve the controversial compensation packages. Glass Lewis’s recommendation carries significant weight, especially among institutional investors, and could trigger a reevaluation of executive pay practices at Goldman Sachs.
The debate highlights a growing tension between retaining top talent in an ultra-competitive market and ensuring that executive compensation is aligned with shareholder interests. Investors are now faced with a pivotal choice that could shape the future of corporate governance at one of Wall Street’s most influential institutions.
https://gaekkul.blogspot.com/2025/03/goldman-sachs-executive-pay-scandal.html
재테크.금융.경제