We Think Shareholders Are Less Likely To Approve A Large Pay Rise For The Goldman Sachs Group, Inc.'s (NYSE:GS) CEO For Now

Key Insights

• Goldman Sachs Group to hold its Annual General Meeting on 23rd of April
• Salary of US$2.00m is part of CEO David Solomon's total remuneration
• The total compensation is 82% higher than the average for the industry
• Goldman Sachs Group's total shareholder return over the past three years was 64% while its EPS was down 5.9% over the past three years

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Despite strong share price growth of 64% for The Goldman Sachs Group, Inc. (NYSE:GS) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 23rd of April may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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

How Does Total Compensation For David Solomon Compare With Other Companies In The Industry?

Our data indicates that The Goldman Sachs Group, Inc. has a market capitalization of US$164b, and total annual CEO compensation was reported as US$31m for the year to December 2024. We note that's an increase of 16% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, 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. Hence, we can conclude that David Solomon is remunerated higher than the industry median. Moreover, David Solomon also holds US$67m worth of Goldman Sachs Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	US$2.0m	US$2.0m	6%
Other	US$29m	US$25m	94%
Total Compensation	US$31m	US$27m	100%

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. Goldman Sachs Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company 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 5.9% per year. In the last year, its revenue is up 14%.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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?

We think that the total shareholder return of 64%, over three years, would leave most The Goldman Sachs Group, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Goldman Sachs Group that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.