The notion that David Solomon is on the verge of getting fired from the top of Goldman Sachs, the prestigious investment bank, is certainly not a new one.
Solly’s p.r. team describes the incessant grousing about his leadership of the bank as noise, but it isn’t. Some powerful people inside Goldman and in retirement want Solomon out. They have for a while and he knows it, no matter what the flacks are saying.
Yet, the fact that he’s still in the job shows that Solomon has more staying power than the defenestration buzz would suggest, people with first-hand knowledge of the Goldman CEO machinations tell me.
“DJ D-Sol” may not be home-free, but barring something incredibly unforeseen (which in this crazy world is always possible) he isn’t going anywhere anytime soon.
“I’ve been in many board rooms when a CEO’s future comes up,” says a senior Wall Street attorney who advises boards and knows many of the key players inside the Goldman rat race. “They generally ask two questions, how bad do we look since we’re the guys who put him there? Then who do we have to replace him with?”
So let’s start with question No 1: How bad will the Goldman board look if it sent Solomon packing?
Pretty bad, my lawyer source tells me. After all, they gave him the job nearly five years ago despite, as I reported back in December when the Solly-ouster rumors first started, Solly’s decidedly un-Goldman-like traits.
One Solomon quirk that has made his tenure fraught nearly from day one is his side gig as a DJ in the summer Hamptons party circuit, where he goes by the name DJ D-Sol.
Goldman CEOs go on to become treasury secretaries, governors, and senators when they leave the job. DJ D-Sol will likely be spinning records when he’s through.
Insider on the outside
His predecessor Lloyd Blankfein, for one, has not been bashful in privately bashing Solomon for his DJ side hustle; he thinks it cheapens the Goldman brand (Blankfein didn’t return a request for comment). Solly, meanwhile, is a refugee from Bear Stearns, a sharp-elbowed investment bank that blew up during the 2008 crisis. He joined Goldman in 1999 but still has the taint of being somewhat of an outsider in Goldman’s cliquish corporate culture.
There have been self-inflicted wounds, as well. He doesn’t consult with a lot of people before handing down his edicts, again something said to be very un-Goldman-like, where rainmakers just love having their frailer egos stroked by the boss.
He botched Blankfein’s ill-fated foray into consumer banking. Goldman got caught flat-footed during last year’s deal drought. Solly scrambled to cut costs and staff dramatically, while Goldman’s stock suffered.
Then he pissed off Goldman’s powerful trading desk (skeptical of investment bankers like Solly to begin with) when he diverted trading profits to the banking side to support its bonus pool during last year’s deal drought.
Yes, there’s lots of grousing about what I just laid out. Yet none of this is likely to get Solly fired anytime soon, my lawyer source and my sources inside the place tell me.
They point to the all-important Goldman stock price. Since Solomon became CEO, the stock has largely kept track with an on-again, off-again bull market. It’s up around 40% by my calculations, compared to a 50% rise in the S&P.
Bank is rolling in it
The firm still ranks high in deal-making; its traders are making lots of money. It’s hard to make a case that Solomon has damaged the Goldman brand with customers despite what you’re reading. A rash move by the board to jettison him now would do even more harm.
Then there’s the question of his replacement.
“Quite frankly, there are very few men or women who can do the job of running a big investment bank,” my boardroom expert says.
Solomon’s No. 2 is a man named John Waldron, also a savvy dealmaker who is said to have a softer touch than Solly with the troops.
His knocks: He’s close to Solomon and like DJ D-Sol he’s an investment banker, which makes him suspect with the traders. He’s also an outsider, from Bear Stearns, no less.
“Waldron clearly has what it takes,” my lawyer source tells me. “But you can hear the board asking itself, ‘Is he too close to David, so why don’t we just see if we can wait this thing out?’ ”
Again, given all the noise about Solomon’s future, I wouldn’t be surprised to wake up tomorrow and hear Solly is going to be spinning records full-time. But the smart money is saying we still have DJ D-Sol to kick around a bit longer.
A Goldman Sachs press official declined to comment.
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