By Rebecca Ungarino

Two influential proxy-advisory groups, whose guidance shapes investors' votes and broader conversations about corporate governance, are recommending that investors vote against pay packages for top Goldman Sachs executives at the bank's annual shareholder meeting this month.

Institutional Shareholder Services, or ISS, and Glass Lewis have each published reports in recent days recommending that shareholders withhold support for Goldman's executive compensation proposal.

At the heart of their criticism: a pair of $80 million retention bonuses in the form of restricted stock units that the firm has awarded to David Solomon, Goldman Sachs' chief executive, and John Waldron, the president and chief operating officer. The industry sees Waldron as a likely CEO contender.

Restricted stock units, or RSUs, are a form of stock compensation that employees can earn over time. The bonuses are on top of Solomon and Waldron's annual pay, which the firm said was $39 million and $38 million, respectively, for 2024. Those paydays alone were each up about 26% from the year prior.

The vote the advisory firms have weighed in on is a nonbinding, advisory one, as it at other banks. Still, the outcome of voting on management pay sends a strong public signal to firms on whether shareholders approve or disapprove of their practices. Boards take the votes into consideration as they mold future plans.

"The significant size of the awards should raise significant concerns," Glass Lewis wrote on Friday in its report, "both on an absolute basis and relative to the executives' existing compensation arrangements, with each award having a value that is twice either executive's 2024 total annual compensation."

Glass Lewis called the awards "excessive." In its own report on Monday, ISS called attention to separate one-time bonuses that Solomon and Waldron had already received in 2021. The awards this year, ISS, wrote, "lack rigorous, pre-set performance-vesting criteria and were granted while previously-granted off-cycle awards to the recipients remain outstanding and eligible to vest."

A spokesperson for Goldman said in a statement on Tuesday that competition for the firm's talent "is fierce."

"The Board took action to retain our current leadership team, to sustain our firm's momentum and maintain a strong succession plan," the spokesperson said. "A 100% stock-based grant is fully aligned with long-term shareholder value creation."

In January, the firm had specifically referred to its awards for Solomon, 63, and Waldron, 56, as "retention RSUs." In other words, Goldman wants the two men to stay on and lead instead of leaving for rivals, for example in private equity, where paydays can amount to many multiples of what bank officials can make.

The Financial Times reported last month that Waldron had been approached in late 2024 by the alternative asset firm Apollo Global Management with an offer that could have been worth some $500 million over time. Ultimately, Waldron stayed with Goldman.

Shares of Goldman have risen some 144% since Solomon and Waldron started in their current roles in October 2018, outperforming the S&P 500. Goldman, whose headquarters are in New York City, has scheduled its annual meeting for April 23 in Dallas. Last year, the bank held its meeting in Salt Lake City.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com

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April 02, 2025 01:30 ET (05:30 GMT)

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