Goldman Sachs is going through a massive transformation under CEO David Solomon

Tue, 11/14/2023 - 13:27

David Solomon has been seeking to transform the powerhouse bank since he came on as CEO in 2018.
He's led three reorganizations and over 200 partners have left in that time.
Here's a look at Goldman Sachs under David Solomon, including its leadership and work culture.

Since becoming CEO of Goldman Sachs in 2018, Solomon has been on a mission to transform the Wall Street bank.

Solomon — a techno DJ who previously went by the nickname D-Sol — made clear from the get-go that he was intent on modernizing and demystifying the secretive investment bank. In his first few weeks, he launched a company-sponsored Instagram account and a new video series called "Catch-up with David." He agreed to relax the dress code for certain divisions and made it his mission to diversify the banks' ranks.

By 2019, the bank was planning its first-ever investor day — part of Solomon's vow to provide more transparency to shareholders.

But there were other changes that Goldman insiders and alumni didn't always agree with, including the bank's money-losing efforts to issue credit cards and other Main Street banking products, which led to the bank's third restructuring in 2022. As Insider's Dakin Campbell has reported, some Goldman insiders have also taken issue with Solomon's leadership style and jet-setting ways, and the bank has seen a higher departure rate among partners than in the past. (See all 200-plus names here.)

Solomon has defended his leadership and efforts to transform the bank. In a recent interview with Goldman alum and reporter Bethany McLean, he called nostalgia over Goldman's past "fantasyland," thanks to the tightening of regulatory requirements that have forced it to pull back on some of the riskier investments that used to make it a ton of money. The story notes that the stock has risen under Solomon despite the tougher banking environment, which has won him the support of shareholders and board members alike.

In an effort to explain how Goldman has changed — and remained the same — under Solomon, Insider dug into its deep archive of stories to compile a list that helps explain the bank's current leadership, its culture, what it's like to work there, and more.

Who are Goldman's leaders?

Screenshot of John Waldron at the Bloomberg Invest conference — John Waldron
Screenshot

Every new leader picks his or her own deputies, and Solomon was no different when he took over in 2018. He picked his longtime deputy and confidant John Waldron, who also joined Goldman from Bear Stearns, to be his president, chief operating officer, and right-hand man.

Other members of Solomon's C-Suite include Denis Coleman, who took over as chief financial officer from Stephen Scherr in 2021. Jacqueline Arthur is global head of human capital management, replacing Bentley de Beyer and Dane Holmes before that. Kathryn Ruemmler is general counsel, replacing Karen Seymour.

Outside of the C-Suite, Goldman's highest-ranking executives are its partners, an exclusive club with access to special perks that's gotten harder to get into since Solomon took over as CEO. In November 2022, Goldman tapped 80 employees to join its newest class of partners, but previous partner classes were smaller. In 2020, Goldman named its smallest partner class since it became a publicly traded company.

Solomon was pressed in February at the bank's investor day about recent partner departures. He said that the rate of partner departures has been no greater than in the past and that in order to keep the partnership "at a certain size," about "60 to 80 partners transition every two years."

Insider's analysis going back to 2014 found that the partner departure rate under Solomon has been higher than what was projected.

One reason might be increased competition from hedge funds and private equity, like $60 billion multi strategy hedge fund Millennium Management.

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What's it like to work at Goldman?

People milling about Goldman Sachs' headquarters at 200 West Street
Getty Images

Despite efforts to transform Goldman, Solomon has adhered to tradition in other ways, including by calling workers back to the office five days a week.

While some pandemic perks have been pulled, including free gym memberships, Goldman still offers some of the best perks on The Street, according to a recent poll by junior bankers.

Still, working at the bank can be tough. Goldman's young bankers have complained about working 100-hour weeks — including in the form of an internal presentation from 13 analysts across the bank that went viral after it was leaked in 2021. In response, Solomon said the bank would work to protect analysts' Saturdays off. But as Insider has reported, such complaints have persisted.

Getting a job at the bank can be super competitive, and rising up in the ranks also requires a lot of commitment, hard work, and even luck. Every year, Goldman cuts the bottom 5% or so of low performers each year (read about how to game the annual performance review here). Earlier this year, however, it laid off about 3,000 people tied to cost-cutting efforts.

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What makes Goldman attractive?

One of the things that makes Goldman Sachs attractive to both talent and potential clients is its success as a dealmaker, as well as its pay and perks.

It's routinely ranked as a top bank for M&A and IPOs, including some of the hottest deals of the day. Last year, for example, it played a big role in helping Amazon buy primary-care firm One Medical for $3.9 billion. This year, it was a lead bank on Instacart's IPO and was a lead banker in Exxon Mobil's $60 billion acquisition of Pioneer Natural Resources, the year's biggest deal yet.

While Goldman is known for housing some of the industry's top dealmakers, it hasn't been able to escape the drought in M&A and IPOs that is dragging down earnings. And its plan for saving Silicon Valley Bank earlier this year fell short.

During this tough time, there has been some evidence that its M&A crown may be slipping, although internally, top brass have assured talent that it has nothing to worry about and that it plans to be the prime beneficiary of a return to the mega-deal, as Insider recently reported.

Indeed, this year's managing director promotions suggest Goldman under Solomon is still investing heavily in its future investment banking talent.

And despite the changes under Solomon, it remains a top job destination for aspiring bankers. Even Solomon was rejected twice before finally landing a job there in 1999 after making a name for himself at Bear Stearns.

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Goldman's wealth management push

Rich People — Hill Street Studios/Getty Images

Solomon once sought to reshape Goldman, a firm synonymous with enormous wealth, as a bank that also counts people with just $1,000 to invest as a client. It launched Marcus Invest, a robo-advisor with a $1,000 minimum. And in 2020, it reorganized how its wealth businesses are situated, creating a new internal consumer and wealth management division.

It has since moved away from its consumer banking efforts and reorganized again in 2002 to focus on two core businesses: investment banking and trading and its asset and wealth management business. The latter is focused on attracting uber-rich clients instead of Main Street clients.

In speaking with investors in October, Solomon reiterated this push, saying it will help the company achieve the financial goals it set out for investors in February.

"We are focused on the execution of our strategy to further strengthen our leading Global Banking & Markets franchise and grow our Asset & Wealth Management business," he said on the call. "I feel good about the relative performance in our core business, and we remain firmly committed to delivering for clients and shareholders.

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What happened to Marcus?

Marcus Goldman Sachs — Marcus offers savings and credit products online and through its app.
Reuters

Goldman Sachs launched its Marcus (named after the bank's founder, Marcus Goldman) unit in 2016, to attract business from Main Street customers. It has been known to offer consumer loans, high-yield savings accounts, and the Apple credit card.

David Solomon Goldman reorganized the bank in 2020 into four divisions: consumer and wealth management, asset management, investment banking, and global markets.

He reversed course just two years later amid big losses, whittling Goldman into three divisions: asset and wealth management, investment banking and trading, and a narrower consumer banking business called Platform Solutions. The bank's consumer lending unit was hit particularly hard by layoffs last month, as Insider previously reported.

The move was applauded by shareholders even though it dragged on the company's financials and led to some anger internally over bonuses.

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Goldman Sachs is going through a massive transformation under CEO David Solomon