Goldman Sachs CEO David Solomon may have sought endorsement or at least understanding from his predecessor, Lloyd Blankfein, who led the bank from 2006 to 2018. However, this summer, Blankfein reportedly conveyed his discontent to Solomon over his successor’s actions.
Blankfein spoke to Solomon in June—phoning him out of the blue and catching the current Goldman Sachs boss unawares—to complain about the company’s performance, sources told the New York Times.
The retired CEO has apparently lost $50 million because of Goldman’s lackluster stock performance so far this year, sinking approximately 1.6% year to date.
Stocks at the Wall Street giant have plummeted more than 8% in the past six months leaving investors—among them Blankfein, who owned approximately 2.4 million shares as of 2019—unimpressed.
According to three people briefed on the conversation, Blankfein told Solomon he could provide more hands-on advice and even went as far as saying he would return to the company if it would help improve its fortunes. Solomon declined.
Sources added that Blankfein’s message to Solomon was clear: His patience is running out.
A spokesman at Goldman Sachs declined to comment when approached by Fortune.
Representatives for Blankfein—reportedly worth $1.2 billion himself—did not immediately respond when approached by Fortune for comment.
Compared with its Wall Street counterparts, Goldman’s past half year hasn’t been exceptionally bad—on the surface at least.
At the time of writing, for the past six months Bank of America and Citigroup shares have both dropped—by approximately 12% and 13.6%, respectively.
The difference is that Goldman has also undertaken three rounds of layoffs in less than 12 months—including 250 senior roles.
But the gloomy news doesn’t stop there for Goldman’s institutional investors—which control more than 71% of the stock.
The company estimated to be around 154 years old reported in July its revenue had sunk by 8% with return on equity sliding to 4%—the worst among the top U.S. banks.
On a call with analysts, Solomon sought to strike an optimistic note, saying that although the mergers and capital-markets business had been depressed for a couple of quarters, the sector remained “fundamental” to the business.
“I think this is a cycle,” Solomon reasoned. “We haven’t seen a cycle in a while, and the other side of the cycle will continue to look attractive.”
Individual issues
Sources told the New York Times that questions are also being asked of the CEO courtesy of the fact he moonlights as a DJ and last year reportedly used a corporate private jet to fly to one of his gigs.
“Solomon does not have a personality which gains the loyalty and respect of his subordinates," a source told the Times.
A Goldman spokesman countered: “David is direct and focused on results. Our clients and investors are direct, and they expect results.”
The boss has also had some hints he may have fallen out of favor with the higher-ups: last year he saw his salary slashed by 29% to $25 million.
The bank's compensation committee said Solomon was demonstrating "strong individual performance and effective leadership" but cited a "challenging operating environment" for the pay cut.
