Influential proxy advisor Glass Lewis has recommended that Goldman Sachs investors vote at the company’s forthcoming shareholder meeting to reject special bonuses being offered to its two top executives amid growing backlash over high pay at American companies.
The pushback is a sign of frustration over pay packages at the biggest banks. Wall Street leaders raised wages nearly 15 percent in 2021 as dealmaking and trade boomed and to keep their top bankers happy in the face of a surge in global wage inflation.
Corporate America is facing a backlash over big awards made in 2021, which is poised to be a record year for executive pay. Glass Lewis on Friday recommended that Coca-Cola shareholders vote against the company’s 2021 executive pay plan. Institutional Shareholder Services, the largest proxy advisor, has recommended Honeywell International shareholders vote against bonuses.
Glass Lewis has questioned Goldman’s decision in October to award $30 million in performance stock to CEO David Solomon and $20 million in stock to group president John Waldron. The bonuses would be paid in October 2026.
In January, Goldman extended those awards to additional members of the management team, including Philip Berlinski, the bank’s global treasurer, and Kathryn Ruemmler, chief legal officer.
The compensation plans will be presented to shareholders in an advisory vote at Goldman’s April 28 annual meeting. At last year’s meeting, 94 percent of the bank’s shareholders supported the company’s compensation plan.
“We are concerned about special, one-time benefits to the CEO and COO,” Glass Lewis wrote in a recommendation report to Goldman shareholders submitted to the Financial Times. “We believe that long-term incentives should encourage leaders to achieve steady and sustained growth, rather than relatively brief peaks in performance.”
Goldman makes the grants based on the average performance of the lender’s stock price over 30-day periods over the next five years.
The recommendations of proxy advisors such as Glass Lewis and ISS take precedence as they are often followed by passive mutual funds. An ISS report on Goldman was not immediately available on Friday. Shareholder votes on compensation are non-binding but may highlight investor dissatisfaction with the company’s boards and executives.
Coca-Cola declined comment, while Goldman and Honeywell did not immediately respond to requests for comment. Glass Lewis’ recommendation to Goldman shareholders was reported by Bloomberg on Friday.
In its proxy materials for the shareholder vote, Goldman argued that the bonus plans help “drive long-term value creation for shareholders” and also “ensure continuity of leadership over the next five-plus years.”
In all, Solomon, Waldron, Berlinski, Ruemmler, and Stephen Scherr, Goldman’s chief financial officer, who left the bank late last year, collectively made $125 million in 2021 — excluding those special grants.
Rival JPMorgan Chase, which has faced backlash from investors over its spending plans, gave its CEO Jamie Dimon a special bonus of stock options last year that are expected to be worth around $49 million.