NEW YORY (NYTIMES) - As bake-offs go it was pretty unusual: A part-time disc jockey and a karate black belt vying to be the next leader of arguably the world's most influential bank.
On Monday (March 12), Goldman Sachs picked the DJ.
Mr David M Solomon, 56, a longtime investment banker, has been anointed as the sole heir apparent to Goldman's chief executive, Mr Lloyd C Blankfein. The decision was signaled Monday with the abrupt retirement of Mr Solomon's lone rival for the job, Harvey M Schwartz, 54.
A decade removed from a global financial crisis, Goldman remains a potent symbol of Wall Street's enduring power, and its chief executive perhaps the banking industry's most prominent spokesman.
Mr Blankfein has led the firm for nearly a dozen years since his predecessor, Mr Henry M Paulson Jr, departed to be the Treasury secretary under President George W Bush. Blankfein, 63, has joked that he intends to die at his desk, but he has signaled to people inside Goldman that he may leave as chief executive as early as this year, according to two people familiar with his thinking.
The possibility that Mr Blankfein could soon step away intensified the competition between Mr Solomon and Mr Schwartz, who twice pressed the board for an answer in recent months.
In February, Goldman's board met at its headquarters and evaluated the two candidates. Mr Blankfein offered his view, and the directors decided Mr Solomon was their man, according to a person who was briefed on the meeting.
The anticipated elevation of Mr Solomon, a Goldman veteran who moonlights under the name DJ D-Sol, spinning electronic-dance music, marks a strategic shift for the bank.
The leadership transition comes at a time when Goldman's traditional business model is under siege. Its bond-trading business, once a huge component of the firm's revenue, which hit nearly US$1 billion a week in 2009, is now a shadow of its former self. The bank's limited presence in countries like Saudi Arabia and Mexico have meant Goldman has been left out of some lucrative transactions. And its belated attempts to muscle its way into businesses such as consumer lending have failed to transform the company into a real competitor of commercial banks like JPMorgan Chase and Citigroup.
Since his elevation to president was announced in late 2016, Mr Solomon has been working to address those shortcomings. In spring 2017, he and Mr Schwartz presented directors with a plan to generate US$5 billion a year in additional revenue starting in several years.
At the same time, Mr Solomon strayed beyond the traditional mold of a Wall Street power broker. He demanded, for example, that Goldman's recruiters increase their hiring of women with the goal of eventually reaching total gender parity.
To many inside Goldman, Mr Solomon’s ascension was far from a sure thing. Mr. Solomon himself was among the skeptics; associates said that he had told them that the top job was Mr. Schwartz’s to lose.
Mr Schwartz, who had been Goldman’s chief financial officer, knew the firm’s business model cold and had played a central role in the firm’s trading business during its heyday. Mr Solomon, on the other hand, had won the respect of the banking division but was less well-known in other parts of the bank.
For the past year, the relationship between Mr Schwartz and Mr Solomon has been chilly at times. They had never been close personally and, while striving to work together professionally, subordinates could tell that both men knew they were in the midst of a horse race.
Mr Schwartz recently confided to friends that he was worried about being “Gary’ed", said people familiar with the conversations. It was a reference to what happened to Mr Cohn, who remained Goldman’s president for more than 10 years in hopes of taking over from Mr. Blankfein, before joining the Trump administration.
Late last year, Mr Schwartz approached Goldman’s lead director, the private-equity executive Adebayo O. Ogunlesi, with an ultimatum, according to people familiar with the exchange. Mr Schwartz said that unless he was tapped as chief executive in the coming months, he would resign. Mr Ogunlesi was noncommittal, these people said.
Mr Schwartz reiterated his demand to Mr Ogunlesi earlier this year, the people said.
The move didn’t work as intended. On Feb 21, during a meeting at Goldman’s headquarters, the board took up the succession question in earnest. Mr Blankfein expressed his preference for Mr. Solomon, said the person who was briefed on the meeting, and the board agreed.
Mr Blankfein then left for a business trip to Asia and didn’t tell Mr Solomon the news for more than a week. Mr Schwartz was notified last week. He immediately decided to retire, capping a career that started on Black Monday, the day in October 1987 when the stock market plunged 22 per cent.
Mr Blankfein announced Mr Schwartz’s exit and Mr Solomon’s promotion to be the firm’s sole president at a weekly management committee early Monday morning, according to people briefed on the discussion.
During the gathering, Mr Blankfein also equivocated on his own time frame for retiring. He said that a Wall Street Journal article last week that said he could leave by the end of this year might be right or might be wrong, the people said.