Goldman Sachs Group Inc.’s most senior leaders are set to unlock a special bonus that will rank among the biggest such payouts the firm has ever awarded.
About 20 executives are in line for equity awards that will be finalized later this month and exceed $500 million at the current share price, according to filings and people with knowledge of the matter. That sum is the result of a five-year run when Goldman bested most of its rivals.
Chief Executive Officer David Solomon is in line for the biggest cut, raking in more than $100 million of the pool. Other winners include his heir-apparent, President John Waldron, and the heads of the bank’s most important business lines — Ashok Varadhan, Dan Dees and Marc Nachmann.
Many Wall Street firms rolled out special incentives for their leaders in 2021, during an extraordinary period for the industry — marked by record deal volumes, the SPAC boom and the meme-stock craze. JPMorgan Chase & Co. CEO Jamie Dimon is one of the chief beneficiaries of that era: His long-term award is currently worth about $270 million.
Goldman’s 2021 bonus package stood out for the breadth of leaders it eventually included, after initially being tailored for just the top two executives.
The incentives were meant to align compensation with performance thresholds, ensure continuity and retain top talent, according to spokesperson Jennifer Zuccarelli. “It’s no secret our firm has performed exceptionally well in the years since.”
Shares of Goldman, while little changed this year, have returned about 150% in the past five, including reinvested dividends.
Goldman has only disclosed individual grants for some of the executives, and the final number will be determined when the five-year performance period ends later this month.
Goldman’s Shareholder Value Creation Award was introduced in October 2021, when Solomon and his deputies, facing mounting pressure to reward junior bankers, were searching for ways to juice their own eight-digit pay packages.
Solomon and Waldron’s combined grant, then worth about $50 million, was modest compared with the private equity industry and the rest of corporate America’s swing-for-the-fences incentive plans. Still, the board’s stated reasoning for the perk — a “war for talent” — irked employees, who pointed to the fact that the same board had deducted $10 million from the CEO’s pay earlier that year over the bank’s 1MDB bribery scandal .
When shareholders questioned why only the top two executives were getting a shot at those awards, the board expanded the program, roping in a wider pool of its management committee members to alleviate concerns. That move broadened the group of recipients, with about 20 of them still at the firm and in line to snag the payouts, the people said, asking not to be identified discussing information that has not been disclosed.
Half of the grants’ total value hinges on the stock reaching certain targets. Goldman’s share price significantly exceeded the threshold required to trigger the maximum payout for that half of the award.
The rest is tied to Goldman’s performance relative to six peers it identified at the end of the five-year period. The firm has outperformed most of that cohort, trailing only Bank of New York Mellon Corp.
BNY, which has returned 174% in that span, is led by Robin Vince, Solomon’s one-time chief risk officer.
At Goldman, the continued churn and changes mean that most members of its current management committee won’t be in line for the 2021 award. Over the years, the group has swelled to include 45 people.
The wake of the 2008 financial crisis was another occasion when Goldman executives were in line for an out-of-cycle windfall, offering options in lieu of standard year-end bonuses for a few hundred executives. By the time those options were fully exercised, they yielded billions of dollars for Goldman partners — well in excess of what they would have typically received.