Goldman’s CEO Is Paying Himself Like a Private-Equity Chief
David Solomon and his top deputies will get a slice of profits from the bank’s private-investment funds
David Solomon is giving himself a raise.
The Goldman Sachs Group Inc. chief executive and a tight circle of lieutenants are taking a cut of profits from the firm’s private investment funds, according to people familiar with the plans. The perk could be worth hundreds of millions of dollars over the next several years to those executives, the people said, multiples of their annual pay depending on how those funds do.
The perk risks angering both shareholders and the Goldman fund managers out of whose pockets the money will come.
Wall Street executives are enormously wealthy by almost any measure. Mr. Solomon made $35 million last year, in line with the CEOs of other big U.S. banks. But when new fortunes are being minted in technology, cryptocurrencies and NFTs, their paydays are starting to pale in comparison.
They are being outshone even in their own backyard by private-equity firms and hedge funds, whose executives have ridden hot markets over the past few years to huge pay packages. KKR’s co-CEOs were paid more than $500 million last year. Mr. Solomon’s 2021 pay was half of what his predecessor, Lloyd Blankfein, made at his pre-2008 peak.
Unique among banks, Goldman is a big player in private investing. The firm has $426 billion of its own money and that of clients invested in corporate buyouts, loans, real estate and stakes in other investment funds. It is in the middle of another big fundraising push.
In the past, the profits from those investments—known in the industry as carried interest—were split evenly between Goldman and the executives actually managing the funds, a common enough setup that ensures everyone has some skin in the game.
Going forward those executives will receive just 35%, the people said. Ten percent will be shared with Goldman’s roughly 400 partners, part of a push to restore the prestige of a title that once guaranteed stratospheric wealth but has dimmed. Five percent will go into a pool for Mr. Solomon and his closest deputies, the people said—fewer than a dozen people.
This isn’t the first time Mr. Solomon has gotten creative in efforts to juice his pay. Late last year he sought to secure a personal share of the profits from blank-check companies Goldman was planning to launch, according to people familiar with the matter. That attempt, earlier reported by Bloomberg, delayed the vehicles’ launch long enough that the SPAC market fizzled. They haven’t gone forward.
Goldman is already facing potential backlash on executive pay. Glass Lewis, which advises big shareholders on corporate-governance matters, is recommending a nonbinding vote against the bank’s pay policies at its annual meeting in two weeks. Glass Lewis took issue with one-time stock grants doled out last fall of as much as $30 million for Mr. Solomon and as much as $20 million for his deputy, John Waldron.
Another shareholder adviser, ISS, recommended a vote in favor.