Goldman’s David Solomon joins CEOs taking pay cuts after laying off thousands

Morgan Stanley CEO James Gorman is among bank bosses accepting a pay cut. PHOTO: BLOOMBERG
(Clockwise from top left) Goldman Sachs' Mr David Solomon, Mogan Stanley's Mr James Gorman and Apple's Mr Tim Cook have had their pay cut, while Alphabet's Mr Sundar Pichai said bonuses for senior executives will be significantly lower. PHOTOS: REUTERS, AFP

NEW YORK - As layoffs at technology and finance companies in the United States pile up, their executives have talked at length about the need to cut costs in a challenging economic environment. At some of the biggest firms, the pain is now being applied at the top.

Goldman Sachs chief executive officer David Solomon was the latest to take a hit: His 2022 compensation was slashed by about 30 per cent to US$25 million (S$32.8 million), the bank said on Friday.

Mr Solomon joins Morgan Stanley CEO James Gorman among bank bosses accepting a pay cut. Alphabet’s compensation details have not yet been released, but CEO Sundar Pichai has said senior executives will get significantly lower bonuses this year.

Each of the CEOs has recently announced thousands of job cuts. Goldman is cutting 3,200 roles in one of its biggest rounds of layoffs, while Morgan Stanley will lay off 1,600 people. Alphabet is cutting about 12,000 jobs – 6 per cent of its total workforce.

Apple, one of the few tech giants that has so far avoided mass layoffs, announced in January that CEO Tim Cook will receive a pay cut of more than 40 per cent to US$49 million for 2023, a rare release of forward-looking CEO salary data. The move was motivated partly by pushback from shareholders. Other top executives at the company got slight raises in 2022.

“Whether these are PR (public relations) moves or not, I think from the perspective of both employees and shareholders, it’s actually the right move for organisations,” said Mr Tony Guadagni, a senior principal in the human resources group at consulting firm Gartner.

“It’s a tremendous message from leadership to say, ‘This is going to hurt, and it’s going to hurt me as well,’” he added.

Many tech companies are pulling back after a period of overzealous growth as interest rates rise and consumer demand cools, while on Wall Street, banks are grappling with an industry-wide deal slump. Corporations everywhere are trying to control costs amid high inflation and ahead of a potential recession.

Falling share prices alone are already cutting compensation for many CEOs if their pay package is heavily contingent on the company’s stock performance, even without a symbolic gesture. Apple’s Mr Cook was among the highest paid executives in 2021, drawing a multimillion-dollar salary in addition to stock. CEO Andy Jassy, by contrast, gets US$175,000 a year in base pay, with most of his compensation coming in the form of stock awards. His 2022 compensation has yet to be announced, but is expected to be down significantly from a year earlier as Amazon shares fell by half. Amazon said in January it will cut 18,000 corporate jobs globally due to slowing sales.

Microsoft, which announced on Jan 18 that it will slash 10,000 jobs, gave CEO Satya Nadella a 10 per cent bump to US$55 million in the year through June 2022. Speaking at the World Economic Forum in Davos, Switzerland, in January, Mr Nadella acknowledged that “we will have to do more with less” going forward.

Salesforce CEO Marc Benioff’s pay, which has held steady for several years, was about US$29 million in 2021. His 2022 calendar year compensation, usually publicised with a filing in late April or early May, is not yet known. The enterprise software company, which is facing pressure from several activist investors, said in January it will cut about 10 per cent of its workforce.

Compensation details have not been announced for Bank of America CEO Brian Moynihan, who added headcount in the fourth quarter, or Citigroup CEO Jane Fraser, who made dozens of cuts in 2022 to the investment banking unit. JPMorgan CEO Jamie Dimon’s pay was kept unchanged at US$34.5 million as the bank added headcount.

Other CEOs, especially in the tech industry, do not take conventional salaries. Meta Platforms CEO Mark Zuckerberg and Snap CEO Evan Spiegel are both known to take symbolic annual salaries of US$1, and Twitter CEO Elon Musk is not required to report compensation now the company is privately owned.

Though top CEOs’ pay is now upwards of 300 times that of the average employee, only a quarter of employees think the disparity is unfair, according to a Gartner survey conducted in mid-2022.

But perceptions are starting to shift as the economy cools and workers feel less secure.

According to another recent survey by Gartner, nearly 80 per cent of employees said senior executives should be willing to take a pay cut before doing layoffs or cutting anyone else’s pay.

For a majority of executives, at least, a new survey suggests those austerity measures are showing up in their own pay cheques. Six in 10 executives have taken a pay cut to minimise layoffs in the past six months, a Resume Builder survey of 1,000 executives at US companies with more than 100 employees shows. BLOOMBERG

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