The knives are for Goldman Sachs CEO David Solomon, and this time the people waving them aren’t the usual suspects – his junior employees were annoyed that they’d to work late or come to the office several times per week.
I’ve heard that Solomon’s problems are more serious and existential, and the way he handles what can best be described as riot in some circles of Goldman’s middle and senior management could determine how long he stays in office.
Solomon, 60, took the job in 2018 and has all the time been a slightly odd selection to steer a “white shoe” investment bank that tended to cultivate its leaders from inside. He cut his teeth in a spot decidedly unlike Goldman: the feisty investment bank Bear Stearns (ultimately one in all the causes of the 2008 financial crisis).
He joined Goldman in 1999 as a partner because his deal-making skills allowed him to bypass management levels.
In other words, Solomon is an outsider in an organization with a wickedly parochial culture. He has a freak gig as a DJ at a summer party in the Hamptons. He can be not a one that likes small talk and doesn’t seek the advice of many individuals before issuing his edicts.
“It doesn’t generate much love,” said one former Goldman executive who knows Solomon well.
Many individuals at Goldman dislike him and let their opinions be heard each inside the company and amongst colleagues at competing corporations.
![Solomon as DJ](https://nypost.com/wp-content/uploads/sites/2/2022/12/David-Solomon-041.jpg?w=1024)
For the record: I met Solomon and I like him for his no BS style. Until recently, the numbers showed it was doing a terrific job. Goldman was on all cylinders in deals and trading. At the same time as the market improves, the stock is up around 60% since Solomon took over as CEO in 2018, in comparison with around 44% growth for S&P at the time.
Goldman continues to be a number one M&A store and is even increasing its market share against rivals on this necessary line of business. Solomon was the first of the other CEOs to acknowledge the crisis and implemented significant layoffs to chop costs.
Still, complaints about Solomon are spreading to CEOs and the partner class. In fact, highly valued Wall Street talent doesn’t control all situations in any company. But Goldman’s managing directors and associates have historically been a strong force as the board decides the fate of current management, making Solomon’s job increasingly precarious as more of them flee his camp.
![David Solomon as DJ](https://nypost.com/wp-content/uploads/sites/2/2022/12/David-Solomon-038.jpg?w=1024)
Here’s how they construct the case against him: Goldman’s longtime investment bank rival Morgan Stanley now easily surpasses Goldman in market value, starting from $144 billion to $116 billion, continuing the trend that preceded Solomon. That is as a consequence of a slowdown in banking transactions, the Goldman business and the Solomon house.
Morgan’s CEO, James Gorman, has deftly expanded the company’s wealth management business, which provides a gentle income. Solomon’s efforts to diversify were an over-indulgence in something called Marcus, a digital retail bank launched by his predecessor Lloyd Bankfein, whom Solomon made his baby. Thus far it has been a disaster, a lot so that Solomon has been forced to scale it down, perhaps on the solution to liquidation.
Meanwhile, Goldman missed targets in its recent earnings announcements, and as markets proceed to wobble, more downside surprises could also be in store for them. Bonuses have fallen, in some places by half, although relative to the nosebleed in 2021.
![Goldman Sachs Headquarters](https://nypost.com/wp-content/uploads/sites/2/2022/12/David-Solomon-042.jpg?w=1024)
Traders fared well in 2022 as the Goldmans are particularly adept at making the most of turbulence, but a part of their pool is diverted to bankers to maintain them in the firm until the trading slowdown is over.
Since Solomon is a banker, he can be accused of favoritism, which is definitely a reasonably lame charge as bankers often subsidize traders’ bonuses when the markets should not profitable. Still, Goldman’s industrial department is powerful and may initiate management changes because it has done in the past.
There’s also the query of Solomon’s allegiance to Goldman’s independent culture. In its 153 years of existence, Goldman has operated under the premise that it will be the buyer in every major strategic acquisition. Solomon’s experience at Bear, then one in all Wall Street’s most transactional venues, means he could also be on the lookout for a deal, not one that will keep Goldman in charge.
![Morgan Stanley CEO James Gorman has deftly expanded the company's wealth management business, which provides a steady income.](https://nypost.com/wp-content/uploads/sites/2/2022/12/james-gorman-1.jpg?w=1024)
At a time when most insiders of Goldman imagine it must make a “transformative deal”, i.e. something big that will allow it to higher compete with Morgan Stanley and superbanks like JP Morgan, there is concept that Solomon may allow swallowing Goldman whole. by, say, a big asset manager or a bank if the price was right.
So far as I do know, this criticism, while true, doesn’t immediately jeopardize Solomon’s job. On the other hand, there’s something to be said for making producers glad.
Jack Welch, the legendary CEO of General Electric, was a notoriously loud and demanding beyond belief. Nevertheless, Welch knew nurture his people.
![former CEO of General Electric, Jack Welch](https://nypost.com/wp-content/uploads/sites/2/2022/12/jack-welch.jpg?w=1024)
“Jack could bite your ass after which put his arm around you and make you’re feeling great,” one in all his longtime managers, Bob Nardelli, once told me.
That is why so many other talented executives selected to remain under Welch, with the abuses and all, and left when his successor took over, watching GE implode from the outside.
Perhaps that is a very good time for Solomon to take Welch’s example and begin hugging him.