Cutting Their Losses

Cutting Their Losses

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  • On Friday, Goldman Sachs disclosed in a regulatory filing that their CEO, David Solomon, will experience a 29% decrease in pay and will receive a total compensation of $25 million for his accomplishments in the past year as the bank faces financial adversity.
  • The new salary is composed of Solomon's $2 million base salary and an additional $23 million in variable compensation, with the majority of the bonus ($16.1 million) being given in the form of performance-based restricted shares and the rest in cash.
  • This cost-reduction strategy reflects a communal effort on the part of the leadership to share in the financial losses of the company. Goldman Sachs has experienced a $3 billion deficit since the beginning of 2020, and had to terminate 3,200 staff members in the most recent round of layoffs – the highest number since 2008.

Why it matters

Amidst looming recession in the US, Goldman Sachs is not the only bank cutting pays and letting go of employees - rival bank Morgan Stanley has done the same. The hikes in the Federal Reserve's interest rates caused a general decrease in capital markets activity, and Goldman Sachs was no exception. In order to cope the bank had to reduce its ambitions in consumer finance and let go of approximately 4,000 employees in two separate rounds of layoffs.


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