We believe it is important to pay a significant portion of our annual variable compensation in equity-based awards. To this end, for 2023 annual compensation, 70% of Mr. Solomon’s and 60% of all other NEOs’ variable compensation was paid in PSUs.
Our equity-based variable compensation is subject to various robust risk-balancing features, as described more fully in —Other Compensation Policies and Practices. Treatment upon a termination of employment or change in control is described more fully in —Executive Compensation—Potential Payments upon Termination or Change in Control.
Year-End PSUs—Overview of Material Terms
∎ PSUs provide recipients with annual variable compensation that has a metrics-based outcome. The ultimate value paid to the NEO is subject to firm performance both through stock price and a metrics-based structure. ROE is used because it is a risk-based metric that is an important indicator of the firm’s operating performance and is viewed by many stakeholders as a key performance metric. ∎ PSUs will be paid at 0-150% of the initial award based on our average ROE over 2024-2026, using absolute and relative metrics as described in the below table.
| 3-Year Average Absolute ROE · % Earned · 3-Year Average Relative ROE · % Earned(a) |
|---|
| <5% | 0% | | <25th percentile | 25% |
| 5% to <16% | Based on relative ROE; see scale at right | | 25th percentile | 50% | |
| 60th percentile | 100% | |
| ≥16% | 150% | | ≥75th percentile | 150% | |
(a) Percentage earned is scaled if performance is between specified thresholds; payout is automatically capped at 100% if 3-year average GS ROE is between 5% and 6%. ∎ PSU performance thresholds for PSUs granted in January 2024 (for 2023 year-end compensation) were unchanged year-over-year. Our Compensation Committee continues to believe these thresholds are appropriate to incentivize senior management to achieve our strategic goals and enhance long-term shareholder value. PSU design, including performance thresholds, will continue to be reviewed annually in connection with annual compensation decisions. ∎ PSUs granted in January 2024 will settle in 2027. For the CEO, COO and CFO, PSUs will settle 50% in cash based on the average closing price of our Common Stock over a ten-trading-day period and 50% in Shares at Risk. For our other NEOs, PSUs will settle 100% in shares of Common Stock, substantially in the form of Shares at Risk.
| ∎ | For purposes of the relative ROE metric, for PSUs granted in January 2024, our Peers consist of Bank of America Corporation; Citigroup, Inc.; JPMorgan Chase & Co.; Morgan Stanley; The Bank of New York Mellon Corporation; Wells Fargo & Company; Barclays PLC; Deutsche Bank AG and UBS Group AG. Our Compensation Committee believes that these Peers appropriately and comprehensively reflect those firms that have a major presence across our collection of scaled businesses and that have regulatory requirements (such as with respect to capital) similar to ours. |
| ∎ | Average ROE is the average of the annual ROE for each year during the performance period. |
| » | Annual ROE for the firm is calculated as annualized net earnings applicable to common shareholders divided by average common shareholders’ equity, as publicly reported by Goldman Sachs in its annual report, and rounded to one decimal place. |
| » | For purposes of determining ROE of our Peers with respect to the PSUs’ relative metrics, annual ROE is as reported in the Peer company’s publicly disclosed annual report, rounded to one decimal place. |
| 50 | Goldman Sachs | Proxy Statement for the 2024 Annual Meeting of Shareholders |
EQUITY-BASED LONG-TERM INCENTIVE: SHAREHOLDER VALUE CREATION AWARDS
| ∎ | In certain circumstances (e.g., a merger, change in corporate structure or other similar corporate transaction) that result in a substantial change in a Peer company’s business or revenue mix, the Committee shall adjust the Peer group and/or make such other equitable adjustments as the Committee deems appropriate. |
| » | Following the Credit Suisse merger with UBS Group AG in 2023, the Compensation Committee amended the peers for outstanding PSUs (those granted in respect of 2020-2022 year-end compensation) to reflect this transaction. |
| » | For purposes of relative ROE calculations, Credit Suisse ROE will be included only when there is a full year of reported ROE available (2021 and 2022 ROE only, as applicable). Accordingly, Credit Suisse has been removed from the Peer group for the 2022 Year-End PSUs (2023-2025 performance period) and for PSUs going forward. |
| ∎ | Certain adjustments (e.g., to a Peer company’s ROE for purposes of the relative ROE calculation) will be based on publicly disclosed financial information. |
| ∎ | Each PSU granted to our NEOs includes a cumulative dividend equivalent right payable only if and when that PSU is earned. |
| ∎ | PSUs granted to our NEOs who meet certain age and service requirements on the grant date have no additional service-based vesting requirement; however, all PSUs are subject to various robust risk-balancing features, as described in —Other Compensation Policies and Practices below. |
| ∎ | For information on the vesting and settlement of Messrs. Solomon and Waldron’s 2019 year-end PSUs during 2023, see —Executive Compensation—2023 Stock Vested. |
