Morning Coffee: Goldman Sachs father of six pressured to take a career risk. Morgan Stanley banker has to pretend to be a billionaire
The summer season rolls on and the drip-feed of negative stories about Goldman Sachs CEO David Solomon continues. But so far, there has been one thing conspicuously missing from the saga – the Solomon alternative. Dramas of this sort always work best if there’s a “king across the water” figure for the opponents to rally round. Now that Lloyd Blankfein has ruled out a return, people have cast around and come up with the name of John Waldron, the current President and COO.
On the face of it, it seems unlikely. Solomon and Waldron are friends from waaay back – they first met when Waldron was an analyst at Bear Stearns. Solomon recruited him from Bear to Goldman and they've maintained their partnership all the way up the leadership ladder. They refer to their management approach as “The David and John Show”.
In other words, anyone who is dissatisfied with D-Sol’s strategy is unlikely to be a supporter of the person who bears second most responsibility for all the key decisions. Waldron is every bit as much a “lateral” as D-Sol, and if Game of Thrones has taught us anything, it’s that regicide is not usually a stable way to ensure a long reign for yourself.
So the people suggesting Waldron needs to “beat his own path to win over disgruntled executives, or risk being seen as an affable clone of the CEO” are effectively asking him to take a huge risk with his own career and turn his back on a lifelong friendship, in order to get into a situation where he has all the same problems as the current CEO plus a few more. Since the last proxy statement showed he earned $23.5m while D-Sol made $25m, that doesn’t feel like a great risk/reward ratio.
It’s hard to find much to say for this theory, except that it would respect the “principle of flashy/folksy alternation.” Waldron the person is a mild-mannered, family oriented man who doesn't take career risks and makes a point of being home to eat peanut butter sandwiches with his six kids. In fact, the Waldron Succession seems so implausible, it’s almost more interesting to speculate who’s feeding it to the press, seemingly based on extrapolation from one ambiguously phrased remark at a dinner.
The Waldron thesis is possibly the result of someone seeking a “stalking horse”, simply to see if other candidates can be persuaded to break cover. That person may be minded to cause trouble for Waldron, who has an important role in heading the partner selection process, creating an opportunity to make enemies despite his personal charm. Alternatively, nefarious forces might be wanting to mess with D-Sol’s head, having learned the other big lesson from history, which is that if a ruler loses the ability to trust anyone around them, they often end up destroying themselves without any need for an overt act of assassination. 🤔
And yet, it might be true – having been in Solomon’s shadow for decades, John Waldron might just be ambitious enough to bust a move, or might have fundamental strategic disagreements that up until now he hasn’t wanted to air in public. Stranger things have happened on Wall Street. Just don’t ask us to name very many.
Elsewhere, if you want to get into the team at Morgan Stanley Wealth Management that works with the family offices of the very richest clients, you have to take a demanding internal exam. But as well as passing the knowledge of tax, trusts and all the other arcana of Richistan, it seems that you also have to spend an hour doing a little bit of role-playing.
David Bokman, Morgan Stanley’s head of family office resources, and his team, will pretend to be representatives of a family, and the candidates have to interview them. In order to succeed, you need to understand the real issues the fictitious client is dealing with – a few years ago, it was a child with a drug problem – rather than coming up with a cookie-cutter generic solution that might have been disastrous in this specific case. It’s an interesting way of ensuring the selection process is realistic, and we have to presume that it’s also fun for the interview team to live the dream of Succession every once in a while.
Meanwhile ...
If you’re tired of banking, but have got used to the lifestyle of being constantly on call for absurdly demanding clients and ending up in nightclubs at 4am, then why not try being a “nightlife concierge” in Ibiza? The most common food request is for frozen pizza, but the other stuff is a bit more glamourous. (Bloomberg)
Janet Yellen apparently ate psychedelic mushrooms on a trip to China. Apparently they’re only hallucinogenic if not thoroughly cooked, and the Treasury Secretary reports "no negative effects”, but were there any positive effects? (Huffington Post)
Michael Rees of Blue Owl is going to be paid a bonus of $8.5m every quarter (plus potential upside) and given more control over his funds, as quid pro quo for supporting the CEO and top management and putting an end to last year’s ugly corporate struggle. (Semafor)
Troubles seem to be coming in armies for Two Sigma – as well as the management struggle and John Overdeck’s divorce, the CIO of equities, Alex Ginsburg, has had to take an extended medical leave. (Business Insider)
Santander continues to add high-profile names as it builds up an investment bank – Fabrizio Giordano, former head of CEEMENA equity capital markets at Barclays, is going to be its EMEA head of strategic equity. (Financial News)
The Financial Conduct Authority recently published a consumer advisory showing misleading marketing of crypto investments in the form of memes. They apparently also created a few other rejected draft memes, but are refusing to hand them over in response to a freedom of information request. (FT Alphaville)
Anyone who thought that the sale of Sculptor Capital was going to end the feud between founder Danny Och and Sculptor’s board was apparently too hasty. He now doesn’t like the price and along with some other former executives, plans to “vigorously oppose” the transaction. (FT)
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