Shareholders' group slams Goldman execs' $80M bonuses

by Todd Gillespie

Goldman Sachs Group Inc.’s $80 million retention bonuses for the firm’s top two leaders have drawn another prominent critic, with Institutional Shareholder Services urging investors to reject the rewards at an annual meeting.

The incentives for Chief Executive Officer David Solomon and President John Waldron “lack rigorous, pre-set performance criteria, which is particularly concerning for off-cycle awards with such large values,” the proxy adviser wrote in note to clients Monday. It accused the board of “poor practice” for adding new incentives before a prior program is finished.

In a separate recommendation late last week, Glass Lewis described the latest bonuses as “excessive.”

Goldman Sachs’s board has urged shareholders to endorse the incentives in an advisory vote at its April 23 meeting, with the firm citing “fierce” competition for talent. The package of restricted stock would reward the pair for sticking around five more years. 

“The board took action to retain our current leadership team, to sustain our firm’s momentum and maintain a strong succession plan,” the company said in a statement after Glass Lewis’ earlier recommendation. 

The bank’s stock has advanced more than 140% since Solomon’s tenure as CEO began in 2018, outperforming the broader S&P 500 Index. The value of the new incentives are based on the stock’s price in January and could increase if it goes up further.

Yet the size and structure of the package raise significant concerns, ISS said.

“The board’s rationale for these grants in the context of strong company performance and competitive climate may be compelling for some shareholders,” the adviser acknowledged. But the fresh incentives were added while another reward program from 2021 is still pending, it said. 

Directors should have laid out their reasoning for doing so, ISS said. “It is generally considered a poor practice to grant overlapping off-cycle awards.”

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