Goldman Sachs is sitting atop Wall Street, advising on more than $1 trillion in merger deals while generating more than $12 billion in equities revenue during the first six months of the year. Those records have sharpened the focus on a potentially complicated leadership transition.
The bank’s board has reportedly discussed replacing CEO David Solomon, 64, with president John Waldron, 57, as early as next year. The Wall Street Journal reported late Monday that directors could vote on the succession plan in the coming months.
Under the reported arrangement, Waldron would take control as CEO while Solomon moved into the executive chairman position. Wells Fargo banking analyst Mike Mayo described the potential transition as one of the “smoother and more deliberate” leadership handovers seen on Wall Street.
Yet Goldman faces a basic problem that could disrupt even the most carefully designed plan. Solomon may not be prepared to surrender the chief executive seat, while Waldron may not be willing to wait indefinitely for the opportunity.
Solomon has restored Goldman’s standing after an ill fated push into consumer banking earlier in his tenure. A recovery in deals, powered by the Trump administration and the artificial intelligence boom, has helped make Goldman a clearer proposition for investors as the leading investment bank focused on its core business.
That success could make retirement a difficult choice for Solomon. “It’s just very hard for a person like that to decide they are really going to retire,” said retired University of Delaware law professor Charles Elson.
Elson added, “Being 65 years old today is like being 55 was 30 years ago.” Solomon is also chairman of Goldman’s board and holds considerable influence over the body, which Elson said would make forcing him out difficult.
Goldman spokesman Tony Fratto said there is “no definitive timeline for succession” at the bank. Boards commonly consider succession over the near, medium and longer term, meaning the reported discussions do not establish a final departure date for Solomon.
Jeffrey Sonnenfeld of the Yale School of Management, another expert on CEO succession, raised concerns about the governance implications. He said it would be bad governance if Goldman’s board were attempting to “drive out a high performing CEO like David Solomon.”
Solomon became CEO in 2018, and Goldman shares have risen more than 300% under his leadership. According to Mayo, that is the second strongest performance against the KBW Bank Index, trailing only JPMorgan Chase CEO Jamie Dimon.
Dimon has led JPMorgan for nearly 21 years. Solomon’s record, combined with Goldman’s current strength, leaves the board confronting the uncomfortable question of how to replace a chief executive while the company is delivering formidable results.
Even if Solomon plans to leave within a year, he has little incentive to announce that intention early. Elson said such a declaration would turn Solomon into a lame duck and reduce his influence within Goldman before the leadership transfer occurred.
The artificial intelligence boom adds another wrinkle because Solomon believes it remains in its early innings. If he chooses to stay as CEO and lead Goldman through that opportunity, Waldron could eventually lose patience while waiting for the top position.
Waldron currently serves as Goldman’s president and chief operating officer. He had reportedly participated in discussions about leadership roles at alternative asset managers Apollo and Carlyle, making his retention another pressing consideration for the bank.
Goldman awarded Waldron an $80 million retention package that runs through 2030. Elson said even that package might not prevent a wealthy outside suitor from pursuing him if the CEO position at Goldman remains beyond reach.
“There will always be tension in a set up like that,” Elson said. He added, “It’s like Prince Charles waiting for his mother to die. You can’t set your own priorities, because there’s someone else in charge.”