Goldman insiders are up in arms over David Solomon's plan to slash bonuses. They fear widescale departures and point to the CEO's failed foray into consumer banking.
To some extent, the declines are being blamed on the normal culprits: Rising interest rates and sluggish dealmaking. But more than half a dozen Goldman managing directors or partners interviewed by Insider say there is resentment brewing that CEO David Solomon isn't doing more to punish money-losing teams, and that his policies may lead to a wave of defections from Goldman's top ranks early next year.
Goldman spokesman Tony Fratto said:"Goldman has always been a pay-for-performance culture, but pay for performance across the company. We are not going to get into finger pointing on any individual segments." The worry among insiders is that Solomon will slash compensation too drastically, leading star employees to look for work elsewhere. That could mean a wave of defections in January and February that disproportionately hit Goldman's top performers.
But that plan struggled early and Solomon stayed committed to it for months if not years longer than many thought prudent. Now some Goldman execs are feeling bitter that money that could have been used to pay them or grow their business has essentially gone up in smoke. As part of the restructuring, Goldman will have to disclose results for the new divisions going back three years before it reports fourth-quarter and full-year earnings in mid-January. It's then that shareholders and Wall Street analysts will finally get a view into how much money Goldman has been spending on the struggling consumer initiative.
Solomon will have to answer to shareholders at Goldman's second-ever investor day, scheduled for the end of February.
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