The Advisors' Blog

– Liz Dunshee

A couple months ago, Goldman Sachs announced that it intended to recover $174 million in compensation of current and former employees, following its $2.9 billion settlement to resolve investigations into the 1MDB matter. We’ve been calling the recovery a “quasi-clawback” because some of the amounts relate to potential forfeitures and future compensation reductions – but now that term is more accurate than we expected. Here’s info from a Reuters article last week:

As first reported by Bloomberg, Goldman Sachs had asked former COO Gary Cohn for $10 million, but he declined and said he instead would make a donation to Goldman Sachs-sponsored organizations, the size of which was not disclosed by his spokeswoman.

I don’t know if the board will experience increased shareholder scrutiny because of this relatively small portion of the clawback not directly benefiting the company (they were all elected with high votes last spring, and a Goldman spokesperson said the company was pleased that the donation would benefit charities that it supports). No doubt they are far from the only company that doesn’t have a strong contractual basis for recovering compensation that’s already been paid – especially to former employees who have no unvested equity that can be withheld. But as the chart in this Foley memo shows, there’s increasing shareholder appetite for more expansive policies. The memo gives a nice overview of trends & “lessons learned.”