Goldman Sachs slashed its CEO David Solomon’s salary by $10 million following the bank’s involvement in Malaysia’s 1MDB scandal.
Documents filed by the bank to the Securities and Exchange Commission on Tuesday revealed that Solomon’s annual pay was lowered to $17.5 million following the bribery scandal that involved some former Goldman Sachs employees and Malaysian Prime Minister Najib Razak.
The Goldman Sachs CEO’s annual compensation was reduced by as much as 36% for 2020 from the $27.5 million he received in the previous year.
The pay cut comes after the New York-based investment bank announced in July 2020 that it has reached a $3.2 billion settlement with the Malaysian government for its role in the multi-billion dollar 1MDB corruption scandal.
Related Story: Ex-Malaysian PM Najib Razak gets 12-year jail term over 1MDB scandal
As part of the settlement, the American investment bank agreed to pay $ 2.5 billion to the Malaysian government in exchange for dropping criminal charges for its alleged role in the 1Malaysia Development Berhad or 1MDB corruption scandal. The bank also guaranteed recovery of around $1.4 billion in proceeds from assets seized by governmental authorities around the world.
The bank said in its disclosure that Solomon would face a pay cut, along with other top executives that include CFO Stephen Scherr and COO John Waldron.
Scherr’s pay was reduced to $15.5 million from $22.5 million in 2019. Waldron’s pay was slashed to $18.5 million, down from $24.5 million in 2019.
The bank’s top three executives’ annual compensation in 2020 was reduced by $24 million in response to the bribery scandal fallout.
Related Story: Goldman Sachs agrees to pay Malaysia $3.2 billion over 1MDB scandal
The salary reductions reflect the decision by the bank’s Board of Directors in October to reduce 2020 compensation.
“While none of Messrs. Solomon, Waldron, or Scherr was involved in or aware of the firm’s participation in any illicit activity at the time the firm arranged the 1MDB bond transactions, the Board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm,” the bank said in its recent filing.
To recall, the involvement of two former bank employees in the multibillion-dollar 1MDB scandal is probably one of the worst scandals Goldman Sachs had to face in history.
Goldman Sachs bankers were accused of helping the alleged mastermind financier Low Taek Jho or Jho Low in allegedly siphoning billions of dollars of the 1MDB sovereign wealth fund intended to develop the Malaysian economy.
Jho Low was also accused of extravagantly spending the money, raised in the form of bond deals facilitated by Goldman Sachs, in buying artwork, real estate, a $250 million yacht, a private jet, and in funding the Martin Scorsese film “The Wolf of Wall Street.”
The scandal set a global investigation that hugely played in the defeat of former and conviction Malaysian Prime Minister Najib Razak who was also accused of channeling $700 million from the 1Malaysia Development Berhad Company to his personal accounts.
The Malaysian Ministry of Finance earlier said the settlement by Goldman Sachs represents its acknowledgment of the misconduct of its two former employees, Tim Leissner and Roger Ng, in the broader 1MDB fraudulent and corruption scheme.
For the year ending December 31, 2020, Goldman Sachs reported net revenues of $44.6 billion, diluted earnings per common share of $24.74, and return on average common shareholders’ equity of 11.1%, as well as book value per share growth of 8.1%.
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