Shareholders May Be More Conservative With The Goldman Sachs Group, Inc.'s (NYSE:GS) CEO Compensation For Now

Key Insights

• Goldman Sachs Group to hold its Annual General Meeting on 24th of April
• CEO David Solomon's total compensation includes salary of US$2.00m
• The total compensation is 59% higher than the average for the industry
• Goldman Sachs Group's total shareholder return over the past three years was 30% while its EPS was down 15% over the past three years

Despite The Goldman Sachs Group, Inc.'s (NYSE:GS) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 24th of April. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Goldman Sachs Group

Comparing The Goldman Sachs Group, Inc.'s CEO Compensation With The Industry

According to our data, The Goldman Sachs Group, Inc. has a market capitalization of US$136b, and paid its CEO total annual compensation worth US$27m over the year to December 2023. Notably, that's a decrease of 16% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$2.0m.

On comparing similar companies in the American Capital Markets industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$17m. This suggests that David Solomon is paid more than the median for the industry. What's more, David Solomon holds US$57m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$2.0m	US$2.0m	7%
Other	US$25m	US$30m	93%
Total Compensation	US$27m	US$32m	100%

Speaking on an industry level, nearly 10% of total compensation represents salary, while the remainder of 90% is other remuneration. Goldman Sachs Group pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at The Goldman Sachs Group, Inc.'s Growth Numbers

Over the last three years, The Goldman Sachs Group, Inc. has shrunk its earnings per share by 15% per year. Its revenue is up 4.6% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Goldman Sachs Group, Inc. Been A Good Investment?

The Goldman Sachs Group, Inc. has served shareholders reasonably well, with a total return of 30% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Goldman Sachs Group that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.