8-KOther Events

GOLDMAN SACHS GROUP INC 8-K Report, Corporate Update (Feb 1, 2019)

Filed February 1, 2019For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) filed an 8-K on February 1, 2019, primarily disclosing details regarding its 2018 year-end compensation decisions for key executives and addressing the impact of ongoing 1MDB investigations on compensation. The filing highlights strong financial performance in 2018, with record diluted EPS and significant increases in net revenues and pre-tax earnings compared to 2017. This robust performance was a key factor in determining executive compensation.

Key Highlights

  • 1David M. Solomon, Chairman and CEO, received $23,000,000 in total annual compensation for 2018, an increase from $21,000,000 in 2017. A significant portion was performance-based restricted stock units (PSUs).
  • 2Lloyd C. Blankfein, former Chairman and CEO, received $20,500,000 in total annual compensation for 2018, a decrease from $24,000,000 in 2017, reflecting his transition out of the CEO role.
  • 32018 financial results showed record diluted earnings per common share of $25.27, net revenues of $36.62 billion (up 12%), and pre-tax earnings of $12.48 billion (up 12%), the highest since 2010.
  • 4A new forfeiture provision was added to 2018 year-end equity awards for Senior Executives, allowing the Compensation Committee to reduce or forfeit awards based on the outcomes of the 1MDB investigations.
  • 5Decisions on three outstanding Long-Term Performance Incentive Plan (LTIP) awards granted in 2011 to retired executives have been deferred due to the ongoing 1MDB investigations, as events during that performance period are relevant.
  • 6The firm reported a return on average common shareholders' equity of 13.3% for 2018, its highest since 2009.

Frequently Asked Questions

Goldman Sachs reported strong 2018 financial results, including net revenues of $36.62 billion (up 12% from 2017), pre-tax earnings of $12.48 billion (up 12% from 2017), record diluted earnings per common share of $25.27, and a return on average common shareholders' equity of 13.3% (highest since 2009).

Compensation was determined based on the firm's strong operating performance in 2018, management's focus on expense discipline and future growth investments. For Mr. Blankfein, his transition out of the CEO role in September 2018 was also a consideration. Mr. Solomon's compensation included performance-based restricted stock units (PSUs) tied to ongoing metrics.

The ongoing governmental and regulatory investigations relating to 1MDB have led to the inclusion of a new forfeiture provision in 2018 year-end equity awards for Senior Executives. This provision allows the Compensation Committee to reduce or forfeit awards if the 1MDB proceedings' outcomes impact compensation decisions. Additionally, decisions on older LTIP awards from 2011 have been deferred due to the relevance of events during that period to the investigation.

David M. Solomon's total annual compensation increased to $23,000,000 in 2018 from $21,000,000 in 2017. Lloyd C. Blankfein's total annual compensation decreased to $20,500,000 in 2018 from $24,000,000 in 2017, reflecting his change in role.