Goldman Sachs, profits down but CEO's salary rises to 31 million

The decision is bound, at the very least, to cause discussion. At the end of a year in which net profit fell by 24%, the investment bank Goldman Sachs decided to raise the ceo David Solomon's annual salary to $31 million, an increase which, ironically, is precisely 24%.

The board justified the increase in the various variable bonuses with the success of the bank's strategic reorientation, scaling back projects in retail banking. Solomon, who had earned 25 million in 2022, will receive 31 million in 2023, broken down as follows: a base salary of 2 million, plus a cash bonus of 8.7 million and a stock bonus of 20.3 million.

The remuneration increase decided on for the CEO of Goldman Sachs is well above that of JP Morgan's number one Jamie Dimon (+4.3% to 36 million), who last year increased the US banking giant's group profits by 33% to a new record of USD 49.6 billion.

In the case of Goldman Sachs, on the other hand, 2023's net profit was the lowest since 2019, with a return on capital of 7.5 per cent, which is about half that of its best competitors. The controversy that is brewing on Wall Street over Solomon's pay increase is also explained by the fact that 2023, in addition to posting declining profits, the bank cut thousands of jobs to contain costs given the temporary downturn in the investment banking market.

But the Goldman Sachs board has total confidence in Solomon, as it has already demonstrated on several occasions over the past two years when it defended the banker against those who - even among the bank's partners - were calling for his removal. Among the reasons (or pretexts) for the criticism of his actions, the accusation that the eclectic 62-year-old banker devoted little time to his office work because he was distracted by his musical hobby also surfaced. Solomon is a passionate DJ (known by his stage name D-sol) and has been performing in public at festivals and events for years. To stem the controversy over excessive work distractions, fuelled largely by those within the bank who do not share his strategy, Solomon officially announced last year that he would give up public DJ performances. But now the controversy surrounding his account is set to flare up again because of the pay rise. More than internal grumblings, what will count this time will be the criticism that may come at the shareholders' meeting from shareholders and investors.