It’s no secret that Goldman Sachs CEO David Solomon isn’t winning popularity contests with the rank and file — but lately the ambivalence has begun to infect the Wall Street giant’s board of directors, sources told On The Money.
Since Solomon took the helm in 2018, Goldman partners have griped over their skimpy bonuses, his costly, botched venture into consumer banking and his side hustle as a DJ.
But another major issue is a high-handed management style that some claim is changing the bank’s culture for the worse.
While Goldman’s stock has soared more than 50% on Solomon’s watch, some insiders fret that a slew of high-level executive departures have clouded the outlook for the iconic investment bank — and make its 61-year-old CEO vulnerable to getting the boot if business takes a bad turn.
“The board is starting to re-evaluate. David may have a problem with the board room. No one wants to see someone is at war with their senior execs,” one Goldman insider told On The Money. “You can ignore the bad coverage for a month or two, but the board no longer has plausible deniability about what’s going on.”
At issue: Goldman Sachs historically has been run by homegrown financiers who have spent most if not all of their careers at the firm. His predecessor Lloyd Blankfein joined Goldman-owned J. Aron & Co. in his late 20s — around the same age Blankfein’s predecessor Hank Paulson joined.
By contrast, Solomon cut his teeth at Drexel Burnham Lambert and then Bear Stearns before joining Goldman in his late 30s.
Critics claim he never understood the culture of camaraderie and collegiality at Goldman.
“He’s turned Goldman Sachs into Bear Stearns. He doesn’t understand the culture of partnership and teamwork and loyalty,” one source said. “He doesn’t understand the difference between a dictatorship and a partnership.”
Another source echoed the gripe, claiming that Solomon lacks the affability, gentility and approachable manner of his predecessor.
“I could always go up to Lloyd and say exactly what I thought and he’d listen,” one source said. “David just does what he wants.”
Goldman’s board, meanwhile, jets to India later this month for its annual international meeting as chatter grows over
Solomon’s lifestyle — his DJing, his use of the corporate jet, and his frequent trips to the Bahamas.
One major problem with ousting Solomon: The bench of potential successors isn’t deep, with many having left over the last few years. Those include Omer Ismail, Katie Koch, Harvey Schwartz, Gregg Lemkau, Eric Lane, Stephen Scherr, and most recently Dina Powell.
As reported by On The Money, Stephanie Cohen, once seen as a possible successor to Solomon as the bank’s first female CEO, is also rumored to have left the bank permanently although Goldman has told employees she is on temporary “leave.”
While some sources suggest John Waldron, the bank’s president and operating chief, is likely the next CEO, others say he is seen as too close to Solomon.
According to multiple insiders, Dan Dees, co-head of global banking & markets, may be the best internal candidate.
Dees is “beloved,” internally a source adds.
Global Head of Asset & Wealth Management Marc Nachmann and Global Co-Head of the Investment Banking Division James Esposito are seen as less likely to nab the top job.
Earlier this week, The Wall Street Journal reported a “civil war” is raging inside the bank.
Some insiders noted the piece included only one positive, on-the-record comment from a current Goldman employee.
“When you do send him a note, he is very responsive and back to you very quickly,” Ericka Leslie, co-chair of Goldman’s partnership committee and chief administrative officers, told the paper.
To be sure, some Goldman insiders believe tales of Solomon’s demise are exaggerated and say it is just a disagreement of style over substance.
Wells Fargo bank analyst Mike Mayo said Solomon deserves credit for Goldman’s stock rally.
Still, Mayo adds that it’s “not clear David Solomon has done as good of a job schmoozing internally as externally with his clients.”
Dick Bove, Odeon Capital Group as their Chief Financial Strategist., adds that Solomon’s efforts to branch into new businesses “made sense,” but as the market for big mergers and IPOs fell apart last year, “he became a target.”
“Executives at other banks running into the same problems will be forgiven,” Bove said. “If you have the right personality you can ride through anything. But he has ruffled feathers and personnel mistakes could cost him his job.”
