Goldman Sachs CEO David Solomon’s compensation package for 2022 was $25 million, including a $2 million base salary and $23 million in variable compensation. 70% of his bonus was in restricted stock units tied to performance metrics. This was 29% lower than his 2021 pay. Goldman struggled in 2022 with declining investment banking fees and asset management revenue. Solomon tried to expand Goldman into areas like transaction banking and mass-market digital banking, with mixed success. His investments and pay reflect the challenges of reinventing Goldman Sachs.
Solomon’s pay cut despite volatile investment returns
David Solomon’s 2022 compensation of $25 million shows the pressure he faces to boost Goldman Sachs’ performance. While parts of his diversification strategy paid off, overall returns were erratic. Profits plunged 48% to $11.3 billion last year amid industry turmoil. Solomon’s pay, while still hefty, dropped 29% from 2021 as Goldman badly lagged rivals like JPMorgan Chase. His bonus now depends more on restricted stock, aligning his interests with shareholders seeking steadier returns.
Investment banking profits prove unstable
Solomon has struggled to reduce Goldman’s reliance on trading and investment banking fees. These businesses remain central to profits, making up over 60% of 2022 revenue. However volatile markets dragged bond trading revenues down by 47% in the fourth quarter. While merging and bond market share grew, overall returns consistently trailed rivals. Fee-dependent businesses may thrive in boom times, but leave Goldman vulnerable to downturns.
Mixed results from consumer banking investments
Solomon invested heavily in Marcus, Goldman’s digital consumer banking division, but losses mounted and he was forced to wind down parts of it. While Goldman now has 15 million customers, its small base can’t compete with giants like Amazon or PayPal. Large tech firms increasingly dominate digital finance. Solomon has instead had to pursue niche partnerships, like an Apple credit card deal where Goldman lacks bargaining power.
Salary weighted towards risky stock awards
The bulk of Solomon’s pay comes in the form of risky stock awards, rather than cash. This structure aligns him with shareholders, but gives little stability. Solomon took home $35 million in 2021 amid a blockbuster year, but faced a big drop when markets turned. Large stock awards motivate short-term bets to juice profits, potentially at odds with Goldman’s long-term health. His own investments may become volatile as a result.
In 2022, Goldman Sachs CEO David Solomon’s compensation fell 29% to $25 million. His bonus now depends heavily on volatile stock awards tied to performance goals. Solomon aims to expand Goldman’s investment banking reach, but fee-dependent businesses remain central to profits. As CEO, Solomon’s investments and salary incentives drive risky decisions that may undermine lasting growth.