Receive the latest news from Goldman Sachs for free
we will send you myFT Daily Digest Email summary of the latest information Goldman Sachs Every morning there is news.
Goldman Sachs Chief Executive David Solomon faces internal backlash and negative publicity but has retained the support of the Wall Street bank’s directors and some top shareholders for now.
Solomon is facing the most challenging period of his nearly five-year tenure as CEO, with falling profits, low morale and unflattering media coverage over the past 12 months, including this month’s New York Magazine article featuring Damaging coverage, asking if he was “too jerk” to run a bank.
The brutal reporting is the latest in a string of news articles that have highlighted pressures within Goldman over a disappointing bonus round, the departure of several top bankers and, in some quarters, criticism of Solomon’s blunt leadership style. disgust.
Dissent among the workforce and in media reports is expected to be discussed at a board meeting next month, according to a person familiar with the matter.
However, people familiar with the thinking of several board members at the recent summer meeting in India said they had so far supported Solomon and believed they should not be swayed by what they saw as outside noise.
“They think most of the content is unfair to reality,” said a person familiar with the board members’ views.
Solomon serves as chairman of Goldman Sachs’ 13-member board. A person who spoke to several members of the group described them as “a patient group in general.”
“They see themselves as a group that is not overly affected by public pressure,” the person said. “The question is whether, in some cases, they are too patient, too willing to convince the executive team of the presumption of innocence.”
That patience has been backed by some of the bank’s largest shareholders. “While David may not be popular (among employees), he has done a fantastic job for shareholders as CEO,” said one Big Ten shareholder.
The shareholder jokingly compared the employee rebellion to the Sendero Luminoso — the Maoist guerrilla group that terrorized Peru for decades before fading away — and predicted that if the bank continues to perform Robust, it “makes a lot of noise (and) eventually dies away”.
“Obviously he’s not going to be a jerk in the eyes of investors. They’re more proactive in talking to investors than in the past,” said another top 10 investor.
“It’s always better to be transparent because you’re more likely to trust numbers than someone’s word.”
Their support reflects Solomon’s efforts to attract investors, a sharp departure from the strategy of his predecessor, who was criticized for an opaque approach that was unsuitable for a large public company. That includes hosting the bank’s first investor day and more regular shareholder meetings.
A second shareholder forgave Salomon’s biggest strategic mistake – an ill-fated foray into retail banking under previous chief executive Lloyd Blankfein. Salomon initially embraced the consumer push before deciding last year to significantly scale back its operations.
“Execution was poor, but I believe he admitted his mistake,” said the second shareholder.
Goldman Sachs declined to comment.
Earlier this year, the Financial Times reported that there was growing unrest within Goldman over mass layoffs and low wages. Negative media coverage has become so severe that Solomon told a private gathering of Goldman executives in February that the number of leaks to the media was hurting the bank, according to the Financial Times.
“If there’s a consistent set of articles and similar themes, that’s a red flag for boards that they have to dig deeper,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. .”
“You can’t make a decision based on a series of newspaper reports, but a series of newspaper reports will draw your attention to what might be wrong.”
Svlook
