John Waldron, Chief Operating Officer of Goldman Sachs Group, and David Solomon, Chairman and CEO of Goldman Sachs.
Jason Alden | Bloomberg | Angela Weiss | AFP | Getty Images
goldman sachs is currently at the top of Wall Street, advising on over $1 trillion in merger deals and generating over $12 billion in equity proceeds in the first six months of this year alone.
These records make it all the more shocking that Goldman’s board is reportedly discussing replacing CEO David Solomon, 64, with President John Waldron, 57, as early as next year.
The Wall Street Journal reported late Monday that a succession plan that would elevate Solomon to executive chairman could be voted on by the bank’s board in the coming months.
Mike Mayo, a banking analyst at Wells Fargo, said Monday that the change of government will be one of the “smoother, more planned” leadership transitions seen on Wall Street.
But there are important risks facing Goldman. Mr. Solomon may not be ready to give up his seat, and Mr. Waldron may not be willing to wait indefinitely.
Mr. Solomon got Goldman back on track after an ill-fated foray into consumer banking early in his tenure. Goldman is once again a clean story for investors, thanks in part to a trading rebound from the Trump administration and the artificial intelligence boom. The company is a top pure investment bank.
“It’s very difficult for someone like that to decide whether or not they really want to retire,” said Charles Elson, a former law professor at the University of Delaware. “Being 65 today is like being 55 30 years ago.”
Mr. Elson also pointed out that Mr. Solomon is chairman of Goldman’s board and has significant influence over the board, making it difficult to remove him.
Goldman spokesman Tony Fratto said there is “no clear timeline” for a successor at the bank. Bank boards often discuss short-, medium-, and long-term succession planning.
“There’s always a sense of tension.”
Another CEO succession expert, Jeffrey Sonnenfeld of the Yale School of Management, said it would be bad governance if Goldman’s board was trying to “get rid of a high-performing CEO like David Solomon.”
Under Mr. Solomon, who took over as CEO in 2018, Goldman stock has risen more than 300%, making it the second-best performer by comparison. KBW Bank Indexaccording to Mayo. only JP Morgan Chase CEO Jamie Dimon, who has led the company for nearly 21 years, has fared better.
So Goldman is in something of a predicament. Even if Solomon plans to step down within a year, there is little incentive to do so. Elson said that would make him a lame duck with less influence within the bank.
But if Solomon decides he wants to stay on as CEO in what he believes is the early stages of an AI boom, Waldron may get tired of waiting for that laurels.
After all, Mr. Waldron, Goldman’s president and chief operating officer, was reportedly in talks for a leadership role at the alternative asset manager. apollo and carlyle.
Mr. Goldman gave Mr. Waldron an $80 million consolation package that runs through 2030 to keep him. Still, a suitor with deep pockets could make a play for Waldron, Elson said.
“There’s always tension in a setup like that,” Elson said. “It’s like Prince Charles waiting for his mother to die. He can’t make his own priorities. There are other people who are responsible.”
