It has been the roughest year in 2022 for Goldman Sachs. David Solomon, the CEO got a salary cut of as much as 30%. This pay cut is quite significant, but apparently, Solomon still received at least $25 million in annual compensation last year. The investment banking giant announced in a Securities and Exchange Commission filing about Solomon’s latest annual compensation. The media said it is actually a huge sum of money, since it slumps almost 30% from the $35 million Solomon got in 2021. Although payment cuts happen, Solomon’s annual salary which is $2 million remains unchanged.
However Goldman Sachs mentioned Solomon’s annual variable compensation which is under 2021 levels. This compensation is paid in a mix of performance-based restricted stock units and cash. This weaker earnings were due to many reasons, especially if we take a look at the 2021’s results. In 2022, Goldman Sachs’s shares slumped more than 10%. This was actually not that bad compared to Goldman Sachs’s rivals like Morgan Stanley, Bank of America, and JPMorgan Chase. However, just like its rivals or the rest of Wall Street, Goldman Sachs encountered slow dealmaking in 2022. In addition, the company announced a 16% fall in revenue in the fourth quarter. Then, their profit plunged 66% earlier this month, due to the challenging merger activity and IPO.
With those challenging events, Goldman Sachs missed Wall Street’s forecasts. The firm’s margin was the widest since the third quarter of 2011. Solomon argued that the company encountered a challenging economic backdrop affecting its earnings. The bank itself is actually having a hard time branching beyond traditional investment banking. Meanwhile, its consumer-focused business does not return much profit. Thus, they pull back some efforts to reach developing banking customers.