Goldman Sachs boosts CEO pay to $39 million, lines up five more years at helm

By Saeed Azhar

NEW YORK (Reuters) -Goldman Sachs CEO David Solomon was awarded an $80 million stock bonus to stay at the helm for another five years, a stark turnaround for a leader whose survival was questioned after the firm's ill-fated foray into consumer banking.

John Waldron, Goldman's president and chief operating officer, and who is widely seen as a successor to Solomon, was also awarded a retention bonus of $80 million in restricted stock, the bank said in a regulatory filing on Friday.

The bonuses, which vest in five years, are an effort by Goldman's board to retain Solomon and Waldron as a senior leadership team, the company said in the filing.

Goldman also reported that Solomon's compensation for 2024 rose by 26% to $39 million.

CEO succession is in focus across Wall Street. From Jamie Dimon at JPMorgan Chase <JPM.N> to Brian Moynihan at Bank of America , investors are focused on the long tenures of executives running the largest U.S. banks. 

The latest vote of confidence for Solomon, 63, comes after a turbulent period during which investment banking activity declined and Goldman's consumer business lost money, prompting criticism of his leadership and speculation two years ago that his job was at risk. Solomon, 63, has faced off doubters as the bank's stock rallied, markets rebounded and he slimmed down Goldman's retail operations.

Goldman Sachs shares rose almost 2% on Friday afternoon.

The bank's share price jumped 48% in the last year, and is up 174% since Solomon took over in 2018.

"The firm is delivering strong performance and the board is determined to maintain our momentum, ensure stability, and keep in place a solid succession plan," Goldman Sachs spokesperson Tony Fratto said. 

"The board is also evolving compensation to enhance the firm’s ability to continue to attract and retain the best talent at a time when the competition for Goldman Sachs talent is especially fierce, including from asset managers and other non-banks," he added.

Goldman Sachs beat Wall Street estimates and earned its biggest quarterly profit in more than three years as its investment bankers brought in more deal fees, while its traders benefited from active markets. Net income climbed to $4.11 billion in the fourth quarter, the bank reported on Wednesday.Solomon told the Reuters Next conference in December that he will lead the bank as long as the board wants him to remain.

Solomon's compensation rose from $31 million in 2023. His 2024 compensation included a $2 million base salary and $8.3 million in cash bonus, with the remainder in stock and a new type of incentive award.

BACK TO TRADITIONAL MAINSTAYS

After graduating from college, Solomon was rejected by Goldman for a job, and later joined as a partner in 1999 from Bear Stearns. 

He climbed the ranks in investment banking and took over from Lloyd Blankfein, who steered Goldman through the 2008 financial crisis and its aftermath. 

Under Solomon, Goldman decided to shrink the consumer business that he once championed. Its retail operations lost billions of dollars and prompted the bank to sell assets and take writedowns.

The Wall Street powerhouse has since shifted its focus back to traditional mainstays of investment banking and trading, while pushing growth areas of asset and wealth management.

"This week it seems like things are going well, next week things could be tough," Solomon told Reuters in December. "But we’re committed to a strategy, we have enormous support from our board, we have an incredible team and I think we’re making good progress, but more to do."

Waldron, 55, who has been president and chief operating officer since 2018 and previously served as co-head of investment banking, is seen as Solomon's closest lieutenant.

Solomon and Waldron were among executives whose pay was cut by millions in 2020 after a graft scandal at Malaysian state fund 1MDB prompted Goldman to pay a record $2.9 billion in the United States to settle investigations.

Solomon said in a statement at the time that none of the past or current members of senior management were involved in, or aware of the firm's participation in any illicit activity when Goldman arranged the Malaysian bond deals.

(Reporting by Saeed Azhar; editing by Lananh Nguyen, Emelia Sithole-Matarise and Leslie Adler)