Where Goldman Sachs CEO David Solomon takes the corporate jet
As shareholders of Goldman Sachs were showing their disappointment over management's presentations at February's investor day just hours earlier — driving the stock down 3.8% on the day — the firm's chief executive, David Solomon, was floating high above the Atlantic.
Cruising along at 43,000 feet, Solomon was aboard the firm's Gulfstream, bound for the Bahamas.
It's a trip the CEO has made many times before, according to signal data for Goldman's planes and half a dozen people familiar with the CEO's schedule. Over 15 months, beginning at the start of 2022, Goldman's two planes have traveled to the Bahamas at least 21 times combined, according to the data.
Solomon has a home in the Caribbean nation, and his trips on the corporate jet are often personal commitments, according to those people. The CEO reimburses Goldman for most of the cost of those personal flights.
But he's also flown for business, in part because Goldman has increased the number of client events held in the tropical location since Solomon became CEO in October 2018, one of the people said.
After Solomon's pitch to investors at Goldman's second-ever investor day on February 28 had fallen flat, the CEO headed to Teterboro Airport in New Jersey for a Bahamas event the company was hosting for technology-focused investment-banking clients.
While it's common for the leaders of big American corporations to fly on private jets, Solomon broke with Goldman tradition when he scrapped a contract to use fractionally owned planes through NetJets in favor of purchasing two jets outright.
Goldman insiders have been grumbling ever since about Solomon's personal jet use, to the Bahamas and elsewhere, considering it too flashy and ultimately unbecoming of a workaday Goldman CEO, as Insider has previously reported.
Corporate-governance experts, meanwhile, say that Solomon's personal use runs afoul of best practices intended to prevent conflicts of interest, even as other Wall Street CEOs use private jets. And at least one of Goldman's shareholders has pressed the bank for more details about Solomon's use.
"The Board fully supports the use of the Goldman Sachs planes for travel, just as it supported the use of private aircraft by previous Goldman Sachs executives," said Tony Fratto, a company spokesman.
"Goldman Sachs operates a global, 24-hour, 7-days-a-week business which demands that our CEO travel extensively around the world meeting with employees, clients, business partners, and government officials," Fratto said. "Executives at Goldman Sachs have been flying on private aircrafts for decades as it is proven to be the most secure, effective, and cost-efficient solution to meet the extensive travel obligations for CEOs of firms like Goldman Sachs — which is why all of our peer institutions also extensively use private aircraft."
(Map: Chay Thawaranont/Insider)
To get a more complete picture of Goldman's corporate aircraft use, Insider set out for the first time to compile a record of all the places the company's jets — a Gulfstream G650ER and a smaller Gulfstream G280 — have flown since the beginning of 2022.
The dataset, which runs from January 2022 through March of this year, is derived from the open-source ADS-B Exchange, which pulls data collected from airplane signal receivers around the world. It includes speed, altitude, and time parameters.
For most of the trips, one of the data points shows the plane on the ground, with an altitude and speed at zero. In some cases, the signal data shows a plane with an altitude of just a couple thousand feet before cutting out. In others, particularly for the trips to the Bahamas, the data shows the plane entering a country's airspace and then emerging at some later time and date.
In both cases, Insider has assumed that the aircraft's destination was the closest or largest nearby airport.
The data does not detail, like a flight manifest would, the people who are on board the plane when it makes its flight. But some of the people familiar with the matter tell Insider that the planes seldom, if ever, fly without Solomon or Goldman's president, John Waldron, and that Solomon prefers the G650ER, while Waldron uses the smaller plane.
John Waldron, president of Goldman Sachs Reuters/Brendan McDermid
Occasionally, Solomon and Waldron switch planes, particularly when Waldron flies overseas. In the days after the Goldman partners' meeting in Miami in early February, for example, Waldron boarded the larger jet for a business trip to Japan, according to people familiar with his schedule. Solomon took Goldman's smaller plane to the Bahamas.
Solomon's post-investor day trip was one of 15 trips the larger plane has made to the Bahamas since the beginning of last year, according to the signal data. His short hop after the partners meeting was one of six made by the smaller plane.
Solomon owns a Bahamas home in the Discovery Land Company development of Baker's Bay Golf and Ocean Club, according to three people familiar with the property. The larger plane has also made trips to Antigua and Barbuda, the British Virgin Islands, and Saint Martin.
Solomon predominantly uses the aircraft for business use. The larger plane flew to Washington, where Goldman executives have visited lawmakers and regulators, 10 times, while the smaller plane made the trip 15 times, the signal data shows.
The larger plane has also flown to Salt Lake City, Dallas, Toronto, Warsaw, and Bengaluru in India, cities where the company has a significant number of employees. It flew to Los Angeles, where clients in the media and entertainment industry are concentrated and at least one of Solomon's children lives, at least eight times.
But the personal trips have captured the most attention.
Corporate-governance experts discourage personal use of the corporate jet because of how easy it is to abuse the asset for personal benefit.
"I have always thought that you do not use corporate aircraft for personal use," said Charles Elson, a corporate-governance expert at the University of Delaware. "It sends a terrible signal to the rest of the organization. Goldman is always tightly run, and a lower-level employee who used a corporate asset for personal use would be discharged. Why is the CEO different? The CEO is not different; the CEO is an employee. With fiduciary obligations, I might add."
The signal data, combined with sources around Goldman, fill in some of the details around Solomon's personal use of the aircraft.
In addition to the various Bahamas trips, the data shows that last July, the CEO and part-time DJ, flew from Japan to Chicago, where he was scheduled to play a set at the Lollapalooza music festival.
Solomon arranged a town hall with employees in Chicago, and colleagues scrambled to line up client meetings on a summer Friday, efforts that some inside Goldman viewed as a way to justify the diversion to the city, according to three of the people who spoke to Insider.
Solomon paid for his hotel room Friday night and also paid for a Saturday flight to the Hamptons, because it was personal travel and took place on the weekend, according to an additional person who was briefed on how the travel was invoiced.
The data and official records also suggest, as Insider has previously reported, that Solomon has worked to improve his golf game, and sought memberships in some of the sport's most prestigious clubs. Goldman's larger plane has touched down in Augusta, Georgia, at least four times since the beginning of 2022. The smaller plane has made the trip at least four times, the data shows.
Augusta is the home of the Augusta National Golf Club, the host of the Masters Tournament and one of the most elite clubs in the world. Several years ago, Goldman inked a multiyear sponsorship deal with the pro golfer Patrick Cantlay, the 2021 PGA Tour Player of the Year, who was criticized earlier this month during the Masters for slowing the speed of play.
Goldman Sachs has a sponsorship deal with pro golfer Patrick Cantlay. AP Photo/Mark Baker
United States Golf Association records, while they don't detail any rounds that Solomon has played at Augusta, do show that Solomon has played at least 20 rounds since July, including at least four at the Tom Fazio-designed course near his home in Baker's Bay.
Beyond corporate-governance concerns, past academic research has suggested that stocks of companies that allow executives to use the corporate jet for personal use underperform benchmarks. But David Yermack, a professor at the Stern School of Business at New York University who has studied the issue, said this month that the practice has grown so much that it might be hard to find enough companies that disallow it and could serve as a control group.
So far, through April 11, Goldman's stock has outperformed the Standard & Poor's 500 on a total return basis during Solomon's tenure, as have the shares of competitor Morgan Stanley, whose CEO also uses the company's planes for personal trips.
Goldman's roughly 60% gain during Solomon's tenure has lagged Morgan Stanley's 108%, but beat the Standard & Poor's 500's 52% and JPMorgan's 31%, according to data compiled by Bloomberg.
Compared with JPMorgan, Goldman Sachs has taken a more conservative approach in requiring Solomon to pay the incremental costs associated with his personal use of the aircraft, according to a Securities and Exchange Commission disclosure. JPMorgan, for example, paid $227,867 for CEO Jamie Dimon's personal use of the company plane in 2022, according to the company's proxy statement.
Morgan Stanley also requires its CEO, James Gorman, to reimburse the company for the costs associated with his personal use of the aircraft, but didn't disclose that amount for 2022 in its most recent proxy statement.
Goldman Sachs' time-sharing agreement requires executives using the plane for personal reasons to cover the cost of fuel, hotel and food for the flight crew, hangar fees, insurance, and landing fees, among other expenses. The invoice must be paid within 60 days.
Goldman covers the cost of the plane's crew and other maintenance and licensing requirements.
Adding to the expenses, according to the data, the Goldman plane often flies back and forth between Miami, which suggests, according to one person familiar with the trips, that the plane may be parking in Miami when there isn't room at the airport in the Bahamas. Solomon would pay for those flights too, Fratto, the Goldman spokesman, said.
"On the rare occasion where there is an empty leg flight on a personal trip, our executives also pay for those flights," Fratto said.
There is no detail in Goldman's 2023 proxy statement of how much Solomon is using the corporate jet for personal reasons or how much he reimburses Goldman for those flights.
Asked about its disclosure, a spokesman said that Solomon "fully reimburses Goldman Sachs for the incremental costs of any personal travel, as stated plainly in our Annual Proxy Statement and as authorized by the Board."
There are two types of SEC regulations that govern the personal use of corporate planes: related-party transactions and perquisite reporting.
SEC regulations require that if a related-party transaction exceeds $120,000, the company must disclose it in its proxy statement. Goldman also acknowledges that any such transaction in excess of that amount must be reviewed by the board.
Alternatively, according to the SEC, if Goldman's costs related to Solomon's personal trips exceed $10,000, it's considered a perk that must be disclosed. If it's more than $25,000, or 10% of the total perks awarded to Solomon, it has to be spelled out in a footnote.
In practice, though subject to SEC and Federal Aviation Administration regulations, the government gives companies wide latitude to come up with reimbursement amounts, according to David Hernandez, an attorney who is the chair of the business aviation and regulation sub-practice at Vedder Price in Washington.
And some set the reimbursement amounts low enough that they don't have to disclose them, he said.
"If a company wants to avoid reporting then they have executives reimburse, but keep it below the $120,000 threshold," Hernandez said.
Doug Gollan, the founder of Private Jet Card Comparisons, a buyer's guide for people who fly private jets, compiles data on how much it costs to charter a private plane. According to his estimates, it would cost an average of between $18,000 and nearly $21,000 an hour to hire a G650 like Goldman's, he said in an interview.
Fratto said Gollan's estimates aren't commensurate with what Solomon pays. "These estimates wildly overstate the cost of such flights to Goldman Sachs and are not an accurate representation," he said.
Goldman has not been accused of any inadequacies in its reporting.
The SEC has brought enforcement actions against firms over disclosures of related-party transactions and perquisites.
It's a judgment issue, and it's an appearance issue. Nell Minow, corporate-governance advisor
In the past five years, large companies like Hilton Worldwide Holdings Inc. and Dow Chemical Co. have settled with the SEC over their aircraft-related disclosures. And just last month, The Greenbrier Companies, Inc., a freight-transport company, settled with the SEC for $1 million over allegations it failed to disclose perks associated with the company's leasing of a jet the CEO owned.
Other watchdogs like Nell Minow, a corporate-governance adviser to large shareholders as the vice chair of ValueEdge Advisors, discourage the personal use of corporate jets because of the signal it sends about using corporate assets.
"I was arguing with a lawyer about this, who was saying, 'It's a rounding error; it's nothing in terms of the amount of money a company like that has,'" Minow said. "My answer to that is it's a judgment issue, and it's an appearance issue," adding that "tone at the top is very real."
Are you a Goldman insider with knowledge of David Solomon's trips? Have I missed some crucial context needed to understand the purpose of one of these trips? Phone, text or message me on encrypted messaging apps at 917-408-3732, or email me at dcampbell@insider.com or dakincampbell@proton.me.
Source: Business Insider
