In our recent Comp & Benefits Brief, The Retention Bonus Backlash: What Executives and Compensation Committees Need to Know, we explored growing concerns about time-vested executive retention awards untethered from performance metrics. A key example was Goldman Sachs' January 2025 grant of $80 million in restricted stock units ("RSUs") to Goldman's CEO and COO, subject to service-based vesting over five years.
Recent Developments: Shareholder Response
Goldman's 2025 Annual Meeting results underscore that shareholder discontent has become a measurable reality:
- Shareholder support for Goldman's executive pay packages fell to 66% ("Say on Pay"), down sharply from 86% in 2024 (Goldman Sachs Proxy Materials).
- Anything below 70% support is widely viewed by proxy advisors like ISS and Glass Lewis as a "failure" requiring board response (ISS U.S. Proxy Voting Guidelines, 2025).
- The criticism centered on the lack of performance conditions tied to the $80 million RSU grants, which many investors viewed as inconsistent with pay-for-performance principles.
- Proxy advisory firms ISS and Glass Lewis recommended voting against the packages, citing the extraordinary size of the awards and absence of performance metrics.
- The 66% approval rate marks the lowest for Goldman since 2016, highlighting mounting shareholder unease (Financial Times).
This sharp decline demonstrates that large retention bonuses without meaningful performance conditions are increasingly unacceptable to shareholders, even for market-leading companies like Goldman.
Key Takeaways for Compensation Committees
- Emphasis on Performance: Shareholders and proxy advisors increasingly expect that long-term incentives, including retention awards, are meaningfully linked to measurable financial, operational, or stock performance metrics.
- Attention to Scale: Higher-value retention awards, while sometimes necessary for competitive positioning, tend to receive additional scrutiny and should be carefully structured in both design and disclosure.
- Process and Disclosure: Compensation committees should thoughtfully document and disclose the business rationale for special grants, ensuring transparency and addressing potential shareholder concerns.
Final Word
As shareholder expectations continue to evolve, compensation committees may benefit from revisiting the structure, size, and disclosure of retention awards. Thoughtful planning and clear communication can help boards and compensation committees balance leadership retention objectives with emerging governance standards.
How Nelson Mullins Can Help
Our Executive Compensation & Benefits team partners with public and private companies, compensation committees, and senior executives to design executive compensation programs that balance talent retention with shareholder expectations. We help:
- Structure performance-sensitive retention awards that support leadership continuity while satisfying governance best practices.
- Ensure compliance with tax, securities, and disclosure rules, including Section 409A, SEC proxy requirements, and stock exchange standards.
- Develop compensation committee processes and documentation that demonstrate sound decision-making and withstand external scrutiny.
- Prepare compensation committees for evolving trends and activist challenges.
In the current environment, retention bonuses must be strategic, defensible, and performance-sensitive to protect both leadership continuity and shareholder relations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
