Goldman Sachs used to mean something—a commitment to doing business in a classy way ethically as well as financially.
But as the Journal detailed, 10% of the profits from Goldman’s funds will be diverted to Goldman’s employee-partners. And 5% will go to an elite group of less than a dozen executives, including David Solomon, the CEO. This “perk,” as the Journal called it, amounts to a tax on shareholder capital that could be worth “hundreds of millions of dollars to those executives” over several years.
Mr. Solomon’s job is to allocate Goldman’s capital. When profits accrue, they rightly belong to the shareholders that risked the capital. Surely, Goldman understands the concept of risk.
Carving out a slice from one of its richest profit streams (but not, of course, sharing in losses) makes a mockery of the blather in the proxy statement about aligning pay with performance. It is aligning pay with self-interest.