Key takeaways:
- Glass Lewis, a prominent proxy adviser, has recommended Goldman Sachs shareholders vote against the bank’s executive compensation plan for 2023.
- The recommendation cites a “significant disconnect between pay and performance,” with Goldman CEO David Solomon receiving a 24% pay raise to $31 million despite the bank’s net income declining by a similar margin.
- Glass Lewis also urged shareholders to vote for separating the CEO and chairman roles currently held by Solomon, citing a preference for an independent chair.
Introduction
Goldman Sachs Group Inc. is facing scrutiny from a major shareholder advisory firm over its executive compensation practices. Glass Lewis, a prominent proxy adviser, has recommended that Goldman shareholders vote against the bank’s executive pay package for 2023, citing a “significant disconnect between pay and performance.”
Detailed Analysis
The recommendation from Glass Lewis 1 comes as Goldman plans to boost CEO David Solomon’s compensation for 2023 by 24% to $31 million, even as the bank’s net income decreased by 24% during the same period. Glass Lewis argued that the pay raise for Solomon does not align with the bank’s financial performance, giving Goldman’s executive compensation plan an “F” grade for the second consecutive year.
In its report, Glass Lewis also urged shareholders to vote in favor of separating the roles of CEO and chairman, both of which are currently held by Solomon 2. The proxy adviser stated,
“An independent chair is nearly always preferable to having a single individual lead both the board and the executive team.”
While the recommendations from Glass Lewis are non-binding, they carry significant weight in influencing shareholder votes at Goldman’s upcoming annual general meeting on April 24th. Last year, another major proxy adviser, Institutional Shareholder Services (ISS), also recommended a split of the CEO and chairman roles at the bank 3.
The pushback from Glass Lewis and ISS comes as Goldman faces criticism for its compensation practices, particularly in light of the bank’s faltering foray into consumer banking and the subsequent return to its core investment banking business. As Reuters reported,
“Solomon’s foray into the consumer realm has been met with missteps and steep losses.”
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Conclusion
The recommendations from Glass Lewis and ISS highlight the growing scrutiny surrounding Goldman Sachs’ executive compensation practices and corporate governance. While the bank has defended its pay decisions, citing the need to retain top talent in a competitive market, the disconnect between executive pay and company performance has raised concerns among shareholders. As the annual meeting approaches, investors will closely watch how the Goldman Sachs board addresses these issues and whether changes to the bank’s leadership structure or compensation policies are implemented.
References
1 Bloomberg (April 4, 2024). “Goldman Pay Plan Gets ‘F’ Grade as Investors Told to Vote No”. Bloomberg. Retrieved April 11, 2025.
2 Reuters (April 4, 2024). “Goldman Sachs urged to separate CEO, chair roles by proxy advisers”. Reuters. Retrieved April 11, 2025.
3 Banking Dive (April 5, 2024). “Proxy advisers call Strike 2 on Goldman CEO Solomon”. Banking Dive. Retrieved April 11, 2025.
4 Reuters (April 4, 2024). “Goldman Sachs urged to separate CEO, chair roles by proxy advisers”. Reuters. Retrieved April 11, 2025.
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