John Waldron, Chief Operating Officer of Goldman Sachs Group Inc., 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 more than $1 trillion in merger deals and generating more than $12 billion in equity revenue in the first six months of the year alone.
These figures make it all the more striking that Goldman’s board is reportedly discussing replacing CEO David Solomon, 64, with Chairman John Waldron, 57, as early as next year.
The succession plan, which would elevate Solomon to executive chairman, could be voted on by the bank’s board in the coming months, The Wall Street Journal reported Monday.
This transition would be one of the “softest and most deliberate” transfers of power seen on Wall Street, Mike Mayo, a banking analyst at Wells Fargo, wrote Monday.
But Goldman faces a major risk: Salomon may not be ready to give up his seat, and Waldron may not be willing to wait for him indefinitely.
Solomon got Goldman back on track after an ill-fated foray into consumer banking earlier in his tenure. With the help of a Trump administration-fueled trading rebound and the boom in artificial intelligence, Goldman is once again a clear story for investors: It’s the first pure-play investment bank.
“It’s very difficult for a person like that to decide that they’re really going to retire,” said Charles Elson, a retired University of Delaware law professor. “Being 65 today is like being 55 30 years ago.”
Elson also noted that Solomon is chairman of Goldman’s board and holds outsized influence over the organization, making it difficult to oust him.
Goldman spokesman Tony Fratto said there was “no definitive timetable for succession” at the bank. Bank boards often discuss short, medium and long-term succession planning.
“There will always be tensions”
Another expert on CEO succession, Jeffrey Sonnenfeld of the Yale School of Management, said it would be bad governance if Goldman’s board tried to “drive out a high-performing CEO like David Solomon.”
Under Solomon, who took over as CEO in 2018, Goldman shares rose more than 300%, the second-best performance over the previous year. KBW Bank Indexaccording to Mayo. Only JPMorgan Chase CEO Jamie Dimon, who has run his company for nearly 21 years, has done better.
This leaves Goldman in a difficult situation: even if Salomon plans to leave in a year, he has little incentive to say so. That would make him a lame duck with less influence within the bank, according to Elson.
But if Solomon decides he wants to remain CEO amid an AI boom that he says is only just beginning, Waldron might tire of waiting for the crown.
After all, Waldron, Goldman’s president and chief operating officer, was reportedly in discussions for senior positions at alternative asset managers. Apollo And Carlyle.
To keep him, Goldman gave Waldron an $80 million retention package that will last through 2030. Even then, a deep-pocketed suitor could play for Waldron, Elson said.
“There’s always going to be tension in a situation like that,” Elson said. “It’s like Prince Charles is waiting for his mother to die. You can’t set your own priorities because someone else is in charge.”
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