Goldman CEO takes $13 MN pay cut for 1MDB scandal

Goldman Sachs cut chief executive officer David Solomon's annual compensation by 36 percent after deducting a penalty for the bank's role in Malaysia's 1MDB bribery scandal.

The board reduced his package to US$17.5 MN (S$23.2 MN) for 2020, down from US$27.5 MN a year earlier. The payout fell after Solomon was required to return about US$10 MN (S$13.2 MN) to make amends for the firm's criminal role in the looting of the Malaysian investment fund, the bank said in a filing on Tuesday (Jan 26). Excluding that penalty, the board effectively kept Solomon's pay flat for the year.

The 1MDB scandal dates to the government of former Malaysian Prime Minister Najib Razak, which set up the 1MDB fund in 2009. Between 2009 and 2014, Goldman bankers paid more than US$1.6 BN in bribes to foreign officials in Malaysia and Abu Dhabi to win 1MDB business, including underwriting US$6.5 BN in bond sales, for which it earned US$600 MN in fees, the bank has said.

Goldman last year agreed to pay US$2.9 BN in penalties to settle criminal charges in the 1MDB case, the largest US fine ever in a corruption case. While Solomon wasn't accused of wrongdoing, the board said in October it would be "appropriate" to withhold US$31 MN in compensation for the CEO and three of his top deputies after the firm entered into more than US$5 BN in settlements to resolve civil and criminal probes.

While the bank, like rivals, did benefit last year from the market tumult that fueled client trading, industry leaders have been frugal with compensation for the rank-and-file. Goldman's spending per person on compensation rose only two percent last year.