Jan 28, 2023
Goldman’s Solomon Joins CEOs Taking Pay Cuts After Laying Off Thousands
(Bloomberg) -- As layoffs at technology and finance companies in the US have piled 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 same austerity measures are also being applied in the C-suite.
David Solomon, the chief executive officer of Goldman Sachs Group Inc., was the latest to take a hit: His 2022 compensation was cut by about 30% to $25 million, the bank said Friday. Solomon joins Morgan Stanley CEO James Gorman among bank bosses accepting a pay cut for his work. Alphabet Inc.’s compensation details haven’t yet been released, but CEO Sundar Pichai has said that senior executives will get significantly lower bonuses this year.
Each of the CEOs has recently announced thousands of job cuts. Goldman Sachs is cutting 3,200 roles in one of its biggest rounds of layoffs ever, while Morgan Stanley will cut 1,600 people. Alphabet is cutting about 12,000 jobs — 6% of its total workforce.
Apple Inc., one of the few tech giants that has so far avoided mass layoffs, announced this month that CEO Tim Cook will receive a pay cut of more than 40% to $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 last year.
“Whether these are PR moves or not, I think from the perspective of both employees and shareholders it’s actually the right move for organizations,” said Tony Guadagni, a senior principal in the human resources group at consulting firm Gartner Inc.
“It’s a tremendous message from leadership to say, ‘This is going to hurt, and it’s going to hurt me as well,’” Guadagni said.
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 Cook was among the highest paid executives in 2021, drawing a multi-million dollar salary in addition to stock.
Amazon.com Inc. CEO Andy Jassy, by contrast, gets $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 this month it will cut 18,000 corporate jobs globally due to slowing sales.
Read more: A running list of layoffs at tech firms in 2023
Microsoft Corp., which announced Jan. 18 that it’ll slash 10,000 jobs, gave CEO Satya Nadella a 10% bump to $55 million in the year through June 2022. Speaking at the World Economic Forum in Davos, Switzerland, this month, Nadella acknowledged that “we will have to do more with less” going forward.
Salesforce Inc. CEO Marc Benioff’s pay, which has held steady for several years, was about $29 million in 2021. His 2022 calendar year compensation, usually publicized with a filing in late April or early May, isn’t yet known. The enterprise software company, which is facing pressure from several activist investors, said this month it will cut about 10% of its workforce.
Compensation details haven’t been announced for Bank of America Corp. CEO Brian Moynihan, who added headcount in the fourth quarter, or Citigroup Inc. CEO Jane Fraser, who made dozens of cuts last year to the investment banking unit. CEO Jamie Dimon’s pay at JPMorgan Chase & Co. was kept unchanged at $34.5 million as the bank added headcount.
Other CEOs — especially in the tech industry — don’t take conventional salaries. Meta Platforms Inc. CEO Mark Zuckerberg and Snap Inc. CEO Evan Spiegel are both known to take symbolic annual salaries of $1, and Twitter Inc. CEO Elon Musk isn’t 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.
“It’s almost bizarre how ingrained extremely high executive compensation has become, not just in the business world, but in the social fabric,” Gartner’s Guadagni said. “But in the context of a decade-long bull market and relatively stable employment, you can understand that.” He said he’s starting to see those perceptions shift as the economy cools and workers feel less secure.
According to another recent survey by Gartner, nearly 80% of employees said that 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 paychecks. Six in 10 executives have taken a pay cut to minimize layoffs in past six months, a Resume Builder survey of 1,000 executives at US companies with more than 100 employees shows.
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