The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

Good morning, everyone. Welcome. I'm David Solomon, the CEO of Goldman Sachs. Thank you all for joining us this morning at our Annual Shareholders Meeting and listening to our audio webcast. I will now call the meeting to order. The Board and I are pleased to be here in Dallas, Texas with our shareholders as well as our people, our clients and our other stakeholders. We've been investing in our presence in Dallas, Texas for over 55 years. It's a great city with a deep talent pool. We are proud of the exceptional team we have in the region and the strong client relationships we have developed here. We look forward to our continued growth here. In 2024, we saw the benefits of our continued investment in our 2 world-class interconnected franchises, Global Banking & Markets and Asset & Wealth Management, and our people, which helped us serve our clients with excellence and deliver strong results for our shareholders. We grew our revenues by 16% and grew our earnings per share by 77%, demonstrating strong operating leverage in our business. And we illustrated that we have a clear path to achieving mid-teens returns for our firm. The first quarter of 2025 was characterized by rapidly shifting sentiment with the market backdrop ending in a very different place than where it started. All in, we produced very strong results in a highly dynamic environment. Our performance underscores the importance of having a truly scaled franchise with broad presence around the world. From here, the economic outlook is uncertain. The changes in trade policy have been top of mind for most market participants and how policies will evolve from here is still unknown. We are hopeful that feedback from companies large and small institutional investors and ultimately, consumers will support an approach that will lead to greater economic certainty and long-term growth. It's impossible for any of us to predict market outcomes, but we have consistently demonstrated that in times of great uncertainty, clients turn to Goldman Sachs for execution, and insight. Our leading franchises have never been better positioned to support our clients, underpinned by our One Goldman Sachs operating philosophy and our exceptional talent. The diversification and strength of our leading client franchises enable us to deliver for our clients across a range of market backdrops. We are confident in our ability to continue to support our clients as they navigate this dynamic operating environment. I would now like to introduce the members of our Board of Directors and to thank them for their service. Would each of you please rise as I say your name. David Viniar, our Lead Director and Chair of our Corporate Governance and Nominating Committee; Michele Burns; Mark Flaherty; Kimberly Harris, Chair of our Compensation Committee; John Hess; Kevin Johnson; Ellen Kullman, Chair of our Public Responsibilities Committee; KC McClure; Lakshmi Mittal; Thomas Montag, Chair of our Risk Committee; Peter Oppenheimer, Chair of our Audit Committee; Vice Admiral, Jan Tighe, Chair of our Technology Risk Subcommittee; and John Waldron, our President and Chief Operating Officer; as well as John Rogers, our Secretary to the Board. Also here with us today are Denis Coleman, our Chief Financial Officer; Kathy Ruemmler, our Chief Legal Officer and General Counsel. Kathy will act as Secretary of this meeting. In addition, from our independent auditors, PricewaterhouseCoopers, we have Sam May and from American Election Services, we are joined by Christopher Woods, our Inspector of Election. I will now turn to the business of the meeting. We will conduct the meeting in accordance with the agenda and rules of conduct. I have been advised by our independent tabulator and our inspector of election that holders of at least 85% of our outstanding shares are present in person or by proxy. And accordingly, a quorum is present. I hereby acknowledge that the matters to be voted upon as described in our proxy statement are properly before this meeting. It is Wednesday, April 23 at 8:34 a.m. Central Time, and I declare the polls on all proposals open. All voting at this meeting will be conducted by ballot. If you have voted your shares prior to the start of the annual meeting, your vote has already been received and tabulated, and there is no need to vote again unless you wish to revoke or change your vote. Submitting a ballot today will revoke any earlier proxies you may have submitted. Anyone who needs a ballot, please raise your hand. They'll be collected after the polls are closed. There will be an opportunity for any shareholder wearing a green shareholder badge to ask questions on each proposal. After all the proposals have been presented, we will collect any ballots and close the polls. Then we will have a general question-and-answer session. If you have a general question or comment, please wait until then to raise it. Please use the podium located in the aisle to present the shareholder proposals and ask any questions. Before speaking, please identify yourself as a shareholder, state your name and, if applicable, your organization. We will now turn to the proposals. The first matter to be voted on is the election of directors. The Board has unanimously recommended that shareholders vote for the election of each of the director nominees for the reasons set forth in the proxy. Are there any questions related to this matter? The second matter to be voted on is an advisory vote to approve the executive compensation of our named executive officers. The Board has unanimously recommended that shareholders vote for the Say on Pay vote for the reasons set forth in the proxy statement. Are there any questions related to this matter? The third matter to be voted on is the approval of the Goldman Sachs amended and restated stock incentive plan 2025. The Board has unanimously recommended that shareholders vote for the approval of the stock incentive plan for reasons set forth in the proxy statement. Are there any questions on this matter? The fourth matter to be voted on is the ramification of the appointment of PricewaterhouseCoopers as our independent auditors for 2025. The Board has unanimously recommended that shareholders vote for the ratification of PwC for the reasons set forth in the proxy statement. Are there any questions related to this matter? The fifth matter to be voted on is a shareholder proposal submitted by the National Legal and Policy Center regarding DEI goals in executive pay incentives. The Board has unanimously recommended that shareholders vote against the shareholder proposal for the reasons set forth in the proxy statement. I believe the proposal is being presented by Luke Perlot. Luke, please go ahead.

Good morning. In recent months, Goldman Sachs has taken meaningful steps to roll back it's DEI programs, which should be no surprise given the widespread backlash against DEI that is spreading across corporate America. However, the company still [ has a ways ] to go. Our proposal asks the Board's Talent and Compensation Committee to revisit and potentially eliminate diversity, equity and inclusion goals that are currently included in the compensation packages for the company's named executive officers. Put simply, we are asking Goldman Sachs to reward executives not for meeting politically motivated hiring or promotion quotas, but for genuine business performance. In the wake of George Floyd's death in May 2020, corporate America raced to demonstrate social responsibility. Board's hired Chief Diversity Officer, pledged tens of billions towards DEI initiatives, and we'll have racial and gender targets into everything from supplier contracts to executive bonuses. Goldman Sachs was no exception. The company publicly declared that it is "committed to making progress towards racial equity, advancing gender equality and increasing representation at every level of our firm." It also set numerical hiring goals at the analyst and associate level for women, black and Hispanic employees. These goals are factored into executive pay through the annual cash incentives that are subjectively awarded by the Compensation Committee. And, therefore, still drive executive behavior and business strategy. Any partial rollback of DEI policies that Goldman has already undertaken are rings hollow as long as these DEI goals remain in the compensation plan. We believe Goldman Sachs needs to get with the times. DEI is on the way out. The Supreme Court's 2023 ruling, Students for Fair Admissions versus Harvard, struck down race-conscious admissions and kicked off a broader legal revolt against quota policies. Although the case concerned higher education, the same reasoning is now being applied to the workforce and litigation risk has exploded. For example, Starbucks is now facing a second high-profile lawsuit alleging its DEI linked practices are discriminatory. This is coming on the heels of the $28.3 million judgment of former manager, already won in 2023. Since January, the Equal Employment Opportunity Commission has issued multiple advisories warning that "any incentives, which affect the terms, conditions or privileges of employment may violate Title V". Just weeks ago, 3 last students even sued the EEOC itself for overcollecting DEI data from a major law firm, which is prove that regulators and not just companies and are targets too. But Goldman Sachs, however, is uniquely vulnerable. The firm has published explicit representation targets, which I already alluded to. These include 50% women globally, 11% black analysts and employees [ or ] associates in the Americas and 14% Hispanic analysts and associates worldwide. Further, the company incentivizes executives to hit these targets by including them in the Compensation Committee's vague assessment framework. And because the weighting is undisclosed and pay is awarded objectively, outside observers can only assume that hitting these goals is essential to maximizing pay. And that appearance alone is enough to invite shareholder suits, employee class actions and EEOC investigations. Every dollar diverted to defend quote-driven policies is a dollar that cannot be deployed toward client service, technology or risk management, and the reputational cost is even greater. Clients choose Goldman because they believe it recruits on merit and its talent is known to be among the best in the world. And a suspicion that identity politics Trump's confidence erodes that trust and pushes business to better govern rivals. We believe the solution is simple. Goldman Sachs should strip race and gender targets out of the incentive plan replaced them with transparent objective measures, stick to things like risk-adjusted returns, client satisfaction, operational excellence, et cetera. These are fully within management's control and directly linked to long-term value creation. We do not oppose a diverse workforce achieved through equal opportunity recruiting, where we oppose our outcome-based quotas implemented for political purposes that pressure managers to discriminate and that expose shareholders to staggering liabilities. Goldman Sachs has built its brand on rigorous risk management, leaving quota metrics in the pay plan, ignores today's legal reality and risk damaging one of the most valuable brands in Wall Street, not to mention of Corporate America. By voting 4 item 5, you will reinforce a culture of merit and ensure that Goldman's leadership is incentivized to deliver on performance, not politics. Thank you.

Thank you, Luke. Are there any questions related to this proposal. The sixth matter to be voted on is a shareholder proposal submitted by the National Center for Public Policy Research regarding racial discrimination audit. The Board has unanimously recommended that shareholders vote against the shareholder proposal for reasons set forth in our proxy statement. I believe the proposal is being presented by Stefan Padfield. Stefan, please go ahead.

My name is Stefan Padfield, and I'm the Executive Director of the Free Enterprise Project, which is part of the National Center for Public Policy Research. The National Center is the proponent of Item 6, which asks Goldman for a racial discrimination audit, analyzing Goldman's legal and reputational risks stemming from its race based initiatives. Why does Goldman need such an audit? First, while Goldman has recently taken steps to reduce its related risk exposure and should be commended for that, issues remain. As just one example, Goldman continues to maintain what may be described as Orwellian "inclusion" networks with names such as "The Black Network" or the "Hispanic/Latinx Network". Second, even while distancing the company from DEI, Goldman's CEO, David Solomon, was quoted as saying Goldman will continue to focus on attracting and retaining diverse talent, this raises the specter that race and sex discrimination and recruitment, hiring and promotion will be encouraged at Goldman in less obvious ways, while the more glaring examples of such neo-racist and neo-marxist initiatives are removed from view. Part of the problem here is that DEI programs such as this do not only risk legal liability, they also run the risk of dividing employees and other stakeholders on the basis of race and sex in ways that increase tension rather than promote unity. In addition, DEI programs can set the very individuals they claim to be helping up for failure and stigma. On this point, it may be worth quoting from a recent piece published by the National Centers Project 21 which is a network of black leaders whose views are often marginalized by mainstream media and DEI activists. The piece is titled rolling back the DEI Rewards Black Americans instead of Crippling Them. Here are some of the relevant quotes. Brandon Brice, former Head of a statewide DEI program notes that DEI reduces the values of merit, hard work and qualifications. It also goes directly against Dr. Martin Luther King Jr.'s vision for a world where people are judged based on the content of their character. April Chapman host of the Standard Truth Podcast notes that DEI and related programs have convinced an entire generation that Black Americans don't have the ability to compete based on merit. President Trump and seeking to end DEI is countering this liberal narrative. And his view is parallel that of Booker Tea Washington, who taught that free markets, hard work and the belief in one's own ability to be the best will dictate success and will result in a more favorable economic outcome. Perhaps most importantly, Priscilla Ron, former Vice Chair of the Colorado Republican Committee notes that "affirmative action initiatives haven't fundamentally changed economic outcomes for Black families over generations and concludes that focusing on skills, education and economic policies that benefit all Americans will do more to lift Black families than race based programs". On this last point, imagine what corporations like Goldman could accomplish, if they stop dividing us on the basis of race and sex and instead focused on raising the floor for all Americans in areas such as education, which are at the root of the pipeline problems driving our demographic inequalities. All the foregoing helps explain precisely why we've seen some of the largest corporations in America turn their back on DEI the past few months. And again, we commend Goldman for the steps that it has taken in that direction but more needs to be done. Before concluding, allow me to address a deceptive narrative that has been making the rounds recently and will likely be popular again after this meeting, which is that low vote counts for proposals such as this one, means shareholders legitimately support DEI. People should be very skeptical of such pronouncements because the majority of votes are controlled by institution and individuals who are subject to conflicts of interest. Specifically, DEI is a subset of ESG and the big 3 asset managers make money on fees associated with ESG funds, while the big 2 proxy advisory firms make money on ESG consulting. Managers and directors in turn, are pressured by these big 5 to support ESG and DEI or be voted out of office. In fact, the recent case of Spence v. American Airlines found that American Airlines breached its duties to employees by relying on BlackRock to manage American Airlines retirement plan because according to the Wall Street Journal, BlackRock favored so-called ESG goals investment decisions on factors other than financial interest. Evidence that low count -- vote counts for anti-DEI proposal shouldn't be celebrated as broad shareholder support for DEI includes the fact that Glass Lewis recently announced that it will not recommend supporting either the pro or anti-DEI proposal set for a vote at Boeing. Clearly, something other than a referendum on DEI is going on here. Nonetheless, I encourage you to support Item 6. Thank you.

Thank you. Are there any questions related to this proposal? The seventh matter to be voted on is a shareholder proposal submitted by the New York City Comptroller on behalf of certain New York City retirement systems regarding disclosure of an energy supply financing ratio. The Board has unanimously recommended that shareholders vote against the shareholder proposal for reasons set forth in the proxy statement. Is there anyone here to present this proposal. Please?

Good morning, Mr. Chair, members of the Board and fellow shareholders. My name is Michele Folder-Taylor and senior investment analyst in New York City Office of Comptroller. I'm here to present Item 7 on behalf of New York City Comptroller Brad Lander and the NYC, New York City Pension Funds. Item 7 requests disclosure of Goldman Sachs Energy Supply ratio or ESR. A simple dollar-based metric showing how much financing the bank directs to low-carbon energy versus fossil-fuel energy. Goldman Sachs plays a major role in global energy finance. While the bank has committed to net zero finance emissions by 2050, it is the lending and underwriting decisions today that will determine whether that goal is achievable. Let me underscore, energy supply ratio ESR is a dollar-based disclosure that reflects the actual financing flows, not client-reported emissions or estimates. It complements finance and missions disclosures by giving investors a clear concrete view of the bank's real-world energy financing priorities. Goldman Sachs has acknowledged both the risks and opportunities of climate change in its disclosure. Since this proposal received 29% support at last year's annual meeting, industry developments have strengthened the investor case for ESR disclosure. I will list four: One, JPMorgan now discloses its ESR, which describes an insightful metrics for our stakeholders that is also consistent with how we finance decision making finance decisions. This underscores its feasibility and value to shareholders; Two, in total, 5 major banks, global banks have committed to ESR disclosure, Citi, RBC, Scotiabank, BNP Paribas as well as JPMorgan; Third, BloombergNEF published an energy supply ratio implementation guide, provided methodology and clear definitions for low carbon and fossil fuel financing; Four, Institution of International Finance, IIF, release a white paper outlining key conditions for banks evaluating ESR disclosure and offering a potential standardizes [ flow to ] methodological design choices. Meanwhile, Goldman Sachs exists from the Net Zero Banking Alliance the Securities and Exchange Commission rollback of Mandatory Climate Disclosure rules and the European Union's delay of this corporate sustainability reporting directive underscores the growing importance of voluntary reliable climate-related transparency. Item 7 is not prescriptive. It gives the bank full flexibility in how to calculate ESR ratio. It does not set targets nor restrict financing. It simply provides shareholders with the insight needed to evaluate climate-related risk opportunities and priorities. I urge the board to reconsider its opposition and shareholders to support this proposal. Thank you.

Thank you. Are there any questions related to this proposal? At this time, I ask that you please raise your hand if you have a ballot to be collected. It is 8:50 a.m., and I declare the polls closed on all proposals. We will provide you with the preliminary voting results on each of the proposals as soon as they are tabulated.

At this time, we invite any shareholder wearing a green shareholder badge who has questions about Goldman Sachs to approach the podium and ask the question and ask your question to ensure that every shareholder has an opportunity to participate, I ask that each speaker limit their questions to 3 minutes. When asking your question, please identify yourself as a shareholder, state your name and, if applicable, your organization. please?

Thank you, Stefan Padfield, again, representing the National Center for Public Policy Research. Transgenderism is one of the most divisive issues today, including questions about whether a man can become a woman simply by saying so, whether children can be born in the wrong body and so on. The divisiveness of that issue likely explains why many corporations have severed ties with the Human Rights Campaign Corporate Equality Index, which promotes transgenderism. Yet the HRC still lists Goldman as a bronze partner that scores 100% on the CEI. Arguably, a corporation must decide which side of the transgendersm issue it is on before deciding whether to continue with HRC or not. Accordingly, my question is, does Goldman support the proposition that a child can be born in the wrong body. Thank you.

I appreciate your question. The firm does not have a position on that. We run an inclusive organization, and we're going to continue to run like an inclusive organization. Are there any other questions? We've been informed by the Inspector of Election that preliminary voting results are now available. Kathy, could you please announce the results?

Thank you, David. Good morning, everybody. These results are based on preliminary estimates. Final voting results will be provided in a Form 8-K that we will file within 4 business days. First, I'm pleased to announce that each of our 14 director nominees received the support of a majority of our shareholders and consequently, each has been elected. Second, the advisory vote to approve the executive compensation of our named executive officers received the support of votes representing approximately 66% of the shares present in person or represented by proxy, and consequently, this advisory proposal is approved. Third, the approval of the amended and restated stock incentive plan received the support of votes representing approximately 68% of the shares present in person or represented by proxy and consequently, is approved. Fourth, the proposed ratification of the appointment of PricewaterhouseCoopers as our independent auditors received the support of votes representing approximately 94% of the shares present in person or represented by proxy and consequently, is approved. Fifth, the proposal regarding DEI goals and executive pay incentives received the support of approximately 2% of the shares present in person or represented by proxy and consequently, is not approved. Sixth, the proposal regarding a racial discrimination audit received the support of approximately 2% of the shares present in person or represented by proxy and consequently is not approved. Seventh, the proposal regarding disclosure of an energy supply financing ratio received the support of approximately 15% of the shares present in person or represented by proxy and consequently, is not approved.

Thank you, Kathy. On behalf of the Board of Directors and the management team, I'd like to thank you all for being here and listening in. We strongly value the engagement with our shareholders and other stakeholders. This concludes our meeting. I hereby declare this meeting adjourned. Thank you very much.