Goldman Sachs said it could withhold millions of dollars in pay from some of its executives because of a scandal involving Malaysia’s sovereign development fund, 1MDB.
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The company said in a regulatory filing on Friday that its board had approved a new forfeiture provision that would allow the committee to reduce the size of the award prior to payment, or to “forfeit the underlying transfer-restricted shares” of executive pay granted in 2018, depending on the outcome of an investigation into the Malaysian fund.
It could ultimately cost former CEO and chairman Lloyd Blankfein, who was at the helm of the company for 12 years, and other top executives millions of dollars.
The Malaysian government is currently seeking $7.5 billion in compensation from Goldman, alleging that the bank helped 1MDB to raise billions of dollars that were later funneled to corruption individuals. The Wall Street firm faces both criminal and civil charges in connection with the case, though it has denied any wrongdoing. Two Goldman Sachs bankers, including Tim Leissner, have also been charged.
“It's very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government,” CEO David Solomon said during the bank’s earnings call. “Tim Leissner was a partner at our firm, by his own admission, was one of those people. For Leissner's role in that fraud, we apologize to the Malaysian people.”
In 2018, Blankfein received $20.05 million in total compensation, according to the Securities and Exchange Commission filing, compared to $24 million the prior year. That includes a base salary of $2 million and “annual variable compensation” of $18.5 million, $14.24 million of which was stocks.