Goldman Sachs companions’ exits level to a altering tradition on the financial institution

Written by Kate Kelly
A bit of greater than two years into David M. Solomon’s tenure as chief govt of Goldman Sachs, not less than 9 senior executives have left or intend to go away quickly. It’s an unusually giant quantity for a agency lengthy outlined by its tight-knit partnership tradition.
Since the start of the yr, 4 key executives have introduced plans to go away, in line with inner emails and workers: Goldman’s high lawyer, one in all its heads of asset administration, one in all its few Black feminine companions and the top of its shopper banking enterprise. Other senior executives, together with one of many heads of funding banking, introduced plans to step down late final yr. All in all, 5 members of the agency’s administration committee, its topmost governing physique, have left or given discover inside the previous 5 months — roughly a sixth of your complete group.
The exodus is partly a mirrored image of the strategy taken by Solomon, a 59-year-old longtime funding banker who grew to become chief govt late in 2018. He has sought to refashion Goldman, which went public greater than twenty years in the past, right into a extra conventional public firm, say present and former companions. That has produced a extra top-down, hierarchical tradition wherein the establishment is greater than its folks and Goldman’s old style partnership construction — which imparts not solely added pay and advantages but in addition a way of household to the agency’s high gamers — is much less related, these folks say.
Goldman plans to switch most people who’re leaving and expects to take action simply, stated firm officers.
“The firm is well on its way to meeting the goals we set, and investors seem to appreciate the changes, the greater transparency and the clear direction we’ve put in place,” stated Jake Siewert, a Goldman spokesperson, in a nod to inventory value, which is buying and selling at about $330, an all-time excessive. “It’s an important part of Goldman tradition for partners to leave for a wide range of new pursuits, and we wish them well.”
Goldman, Siewert stated, has “an extremely deep bench.”
Solomon stepped into his job about 2 1/2 years in the past when Lloyd Blankfein, who noticed Goldman via the monetary disaster, retired. An avuncular, Harvard-educated former gold salesperson, Blankfein was identified for his sharp mind and self-deprecating quips. “How far down into the partnership do I have to go to find a partner who will listen to me?” he used to joke, in line with companions. He generally likened his function to that of the senior associate at a legislation agency.
Even although Goldman has not been a real partnership since 1999, when it went public, earlier chief executives, together with Blankfein, had been deferential to that side of the agency’s tradition. Partners, who had been named each two years, had been feted at a black-tie dinner dance identified internally because the “prom.” Once a part of the group, they typically had spirited debates about promotions and agency technique.
The partnership was as soon as highly effective sufficient that when high-performing workers had been wooed by different firms, their colleagues and managers had been typically ready to make use of their private connections — together with elevated pay and promotional alternatives — to reel them again.
Solomon took a unique strategy. He streamlined Goldman’s construction, creating a brand new shopper wealth administration unit to deal with its Marcus retail banking division alongside its cash administration unit for wealthy people, whereas focusing the standard asset administration enterprise on funding funds. He sought to trim prices, probably together with payouts to companions, who usually make tens of millions of {dollars} in yearly pay. And he pruned the 550-member partnership to nearer to 400. Under Solomon, the associate promenade was downgraded to cocktails, with a buffet dinner and no dancing.
Solomon additionally has tried to diversify Goldman’s ranks to incorporate extra ladies and folks of coloration. He named ladies to the posts of treasurer and head of technique, and added two Black executives to the administration committee.
He additionally presided over a banner 2020, wherein the agency churned out almost $1 billion in income per week, its greatest leads to 11 years, and reported its second-highest income ever.
In a short observe to traders Tuesday entitled “GS: Poached Again; Harvard of banks,” banking analyst Mike Mayo wrote that Goldman remained robust and that Solomon “has indicated that the partnership ranks were too top heavy, and some churn should be expected.”
When the pandemic began, Goldman — like all different companies — struggled to steadiness bringing workers again to the workplace, the place they may very well be extra collaborative and higher mentored, and letting them make money working from home to keep away from getting sick.
Solomon, who labored from the financial institution’s downtown Manhattan headquarters all alongside, had initially been versatile about letting Goldman workers commerce and advise purchasers remotely. Sheila Patel, the 51-year-old chair of the asset administration division, labored from her trip house in New Zealand. Patel was amongst those that finally left, retiring from the agency in December. Marco Argenti, the co-chief info officer, was at his house in Seattle. Thousands of others labored from house, in areas as diversified as second houses and the grasp toilet of their mother and father’ home.
But earlier than lengthy, say present and former companions, Solomon started pressuring some managers — particularly companions — to return to the workplace. Some companions bristled on the look of Solomon questioning their productiveness as a result of they weren’t within the workplace. Others questioned his mandate that conferences of the administration committee be held at Goldman headquarters, say present and former companions. Some believed that the assembly may simply as simply be carried out from house — particularly as a result of the 32 committee members ended up spreading out over a number of convention rooms and conducting their affairs by way of video feeds to obey social-distancing protocols.
Late in March, Gregg Lemkau, the longtime co-head of funding banking and an govt who was extensively thought of a possible Goldman CEO, despatched a Twitter submit about getting up throughout the wee hours to work remotely from his house in Hawaii, which is six hours behind New York.
He quickly received a name from Solomon, who was not happy with the notion of the message, say three folks with information of the decision. The two executives argued, these folks stated, over whether or not Lemkau ought to return to New York. They settled their variations, and Lemkau stayed put for 2 months earlier than flying again. In mid-November, Lemkau, then 51, introduced plans to retire from Goldman to turn out to be chief govt of the household funding workplace of Michael Dell, the billionaire founding father of the pc firm.

“The reaction was overwhelming,” stated Lemkau in a podcast weeks later. The recollections colleagues shared, he stated, underscored how his remedy of different folks had outlined him. “Not the big deals I did, not anything formal I did, but the little things that you did that made a difference in their lives,” he mirrored, “it sort of makes you feel like, ‘Damn, I’m glad it was worth doing all that stuff.’”
Lemkau has advised folks privately that his departure had nothing to do along with his tiff with Solomon.
The exodus picked up steam this yr. Last month, Michael Daffey, who had led the worldwide markets division, retired.
Then, this week, Eric Lane, co-head of the agency’s asset administration enterprise and in addition considered as a contender for the Goldman CEO function, took a senior function at a big hedge fund. Karen Patton Seymour, the agency’s basic counsel since 2019, additionally left and plans to return to her former legislation agency, in line with inner emails. All had been members of the administration committee, and all however Seymour had lengthy tenures on the agency. Around the identical time, Omer Ismail, head of Goldman’s Marcus shopper enterprise, left to run a brand new financial-technology enterprise that has been seeded by Walmart, taking a deputy who had overseen the agency’s Apple bank card partnership together with him.
Stephanie Smith, a shopper wealth administration associate and one in all simply 5 Black feminine companions on the agency, has additionally exited to take an govt function at BlackRock, say three folks with information of her talks. BlackRock, the large asset supervisor, had tried and did not recruit her about 5 years earlier, two of the folks stated.
Ram Sundaram, a senior buying and selling govt identified for structuring complicated bond offers, left this yr, as did Jason Mathews, who ran a U.S. stock-product gross sales desk and was one in all a roughly half-dozen Black male companions.
For many, the second was bittersweet.

In an e mail, Mathews stated he was “extremely proud to be able to call G.S. home for the last 20 years.” The agency, he added, “is still and always will be a place where everyone works their tail off to get better every day — no matter what challenge is in front of them.”