What is the primary purpose of the "Shareholder Value Creation Award"?

The award's primary purpose is to incentivize long-term leadership continuity (over 5+ years), align executive compensation directly with shareholder value creation through rigorous performance metrics, and enhance executive retention in a competitive market for talent.

How is the vesting of these PSUs determined?

Vesting is based on a five-year performance period and is contingent upon achieving specific performance targets related to Total Shareholder Return (TSR). 50% of the award is tied to absolute TSR goals, and the remaining 50% is tied to relative TSR performance compared to a defined peer group of financial institutions.

Are these PSUs part of the executives' regular compensation?

No, the Shareholder Value Creation Award is explicitly stated as not being part of Messrs. Solomon's or Waldron's regular annual compensation and will not be awarded on a regularly recurring basis. It is a special award designed for specific long-term objectives.

What are the potential consequences if the executives engage in risky behavior or leave the company?

The PSUs are subject to significant clawback provisions and forfeiture. This includes recapture for actions deemed "Cause," failure to fulfill obligations, or materially improper risk analysis/failure to report risks. Vesting also requires continuous service with Goldman Sachs until the end of the five-year performance period, with limited exceptions.

GOLDMAN SACHS GROUP INC 8-K: Leadership Changes

Summary

Goldman Sachs Group, Inc. (GS) announced on October 21, 2021, that its Board of Directors, upon the recommendation of its Compensation Committee, granted a significant performance-based restricted stock unit (PSU) award, termed the "Shareholder Value Creation Award," to its top two executives: Chairman and CEO David M. Solomon and President and COO John E. Waldron. This award is designed to incentivize long-term leadership, align executive pay with shareholder value creation, and enhance retention amidst a competitive talent market. The award, which is separate from regular annual compensation and not expected to be recurring, is tied to a five-year performance period. Vesting is contingent upon achieving pre-established absolute and relative Total Shareholder Return (TSR) goals. Specifically, 50% of the award is based on absolute TSR, and the other 50% is based on relative TSR compared to a peer group of major financial institutions. The structure aims to promote sustainable growth without encouraging excessive risk-taking. Earned PSUs will be settled in shares of common stock at the end of the performance period, subject to additional holding periods and stringent clawback provisions.

Key Highlights

1Goldman Sachs granted performance-based restricted stock units (PSUs) to CEO David M. Solomon and President John E. Waldron.
2The "Shareholder Value Creation Award" is valued at $17.0 million for Mr. Solomon and $11.4 million for Mr. Waldron, based on the grant date fair value.
3This award is a special, non-recurring grant designed to ensure leadership continuity for the next 5+ years and enhance executive retention.
4Vesting is tied to a five-year performance period with goals based 50% on absolute Total Shareholder Return (TSR) and 50% on relative TSR.
5The peer group for relative TSR comparison includes major financial institutions like Bank of America, Citigroup, JPMorgan Chase, Morgan Stanley, BNY Mellon, and Wells Fargo.
6Earned PSUs will be settled in shares of common stock at the end of the five-year period, with an additional one-year restriction on transferability.
7The award includes robust clawback provisions and forfeiture triggers, such as for "Cause" or failure to adequately manage risk.

GOLDMAN SACHS GROUP INC 8-K Report, Executive Changes (Oct 22, 2021)

Summary

Key Highlights

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