Goldman shareholders OK executive pay but with less support

Goldman Sachs shareholders approved a say-on-pay resolution Wednesday, but support for the nonbinding measure fell by about 20 percentage points from a year earlier amid opposition to the large, one-time payouts to two top executives.

Goldman’s executive-pay proposal garnered 66% support. At the Wall Street bank’s 2024 annual meeting, the say-on-pay vote passed with 86% support.

The smaller margin of support at Goldman came eight days after shareholders at Texas Capital Bancshares voted down that company’s say-on-pay proposal by a 53%-47% margin.

The weaker-than-normal results at two publicly traded banks could be a sign that more lenders are likely to face dissent over their executive-pay decisions — either in the coming weeks, as annual-meeting season continues, or next year, when boards of directors may have to contend with the impact of a sagging economy.

Jun Frank, global head of compensation and governance advisory at ISS-Corporate, told American Banker that executive-compensation decisions tend to draw more opposition when the companies use greater discretion, rather than tying pay to hard metrics.

Some companies are starting to make more discretionary decisions this year, but the trend will likely become more obvious in 2026, Frank said. Weaker market conditions could lead board compensation committees to tie pay less to objective performance measures.

“So next year we might see a lot more pushback,” said Frank, whose business unit advises corporations and is separate from the part of Institutional Shareholder Services that makes vote recommendations to shareholders.

This year, say-on-pay resolutions at a number of large and midsize U.S. banks have drawn opposition from proxy advisory firms — including Institutional Shareholder Services, or ISS — whose recommendations tend to have a significant impact on shareholder vote tallies.

ISS recommended that Bank of America, Truist Financial and KeyCorp shareholders vote against those banks’ say-on-pay measures.

BofA, which held its annual meeting on Tuesday, said its say-on-pay resolution received majority support, but it has not yet released the specific vote tally.

Charlotte, North Carolina-based Truist has scheduled its annual meeting for April 29. KeyCorp, headquartered in Cleveland, is planning to stage its yearly stockholder gathering on May 15.

To be sure, most banks that have already held their annual meetings this year received strong shareholder support for their executive pay packages, according to data compiled by ISS-Corporate.

At Fifth Third Bancorp’s annual meeting on April 15, the advisory say-on-pay resolution garnered 95% of the vote. Regions Financial, M&T Bank and Bank of New York Mellon all obtained more than 94% support. Even Huntington Bancshares, a relative laggard, got more than 86%.

Typically, say-on-pay resolutions draw more than 90% support, said Kelly Malafis, founding partner at Compensation Advisory Partners, a consulting firm that works with companies on pay issues.

“So even though anything about a 50% vote is passing, companies like to be in the 90s or the high 80s,” Malafis told American Banker. “And proxy advisory firms have guidelines.”

If a company receives less than 70% support in a given year, ISS expects to see evidence of what the firm characterizes as “compensation committee responsiveness” in the following year’s proxy statement, Malafis said.

“They expect the comp committee to engage with shareholders to find out why they got less than 70%, and to share that feedback in the proxy, and to tell the shareholders: Are they going to do anything differently?” Malafis said.

Glass Lewis, another leading proxy advisory firm, sets an even higher threshold, according to Malafis. “Anything below 80%, they expect those compensation committees to go out to shareholders again and find out why.”

Such efforts can be fruitful. In 2022, only 31% of JPMorgan Chase’s shareholders voted “yes” on the say-on-pay resolution. That vote followed a one-time award of $52.6 million in stock options to CEO Jamie Dimon.

The following year, 89% of JPMorgan’s shareholders voted in favor of the say-on-pay resolution. Prior to the 2023 vote, the nation’s largest bank promised not to grant any future special awards to Dimon.

At Goldman, this year’s say-on-pay resolution drew opposition from both ISS and Glass Lewis. At issue were restricted stock-unit payments of $80 million each to CEO David Solomon and President and Chief Operating Officer John Waldron, part of an effort to retain the two executives.

ISS had called the Goldman awards “problematic,” while Glass Lewis described them as “excessive.” A Goldman spokesperson declined to comment on the vote results.