Goldman Sachs (GS) CEO David Solomon is finishing 2023 talking about the same subject that was front and center for him as the year began — the "noise" surrounding one of Wall Street’s most storied banks.
"Broadly speaking, morale at the firm is pretty good,” Solomon said Tuesday morning during the FT Global Banking Summit in London. "Is there noise sometimes from certain people? Absolutely ... It goes with the territory," he added.
He made a similar point last February during Goldman's investor day. "I wish the noise was different," he said then, acknowledging that "dramatic shifts" in the firm’s performance between 2021 and 2022 "probably created more noise or a little bit more rumbling than usual."
No big bank CEO was under more scrutiny in 2023 than Solomon, who had to wrestle with everything from job cuts and a global investment banking slowdown to reports of partner unrest and complaints about his side gig as a DJ.
He is trying to lead the storied Wall Street bank through a tricky retrenchment from consumer lending while focusing the firm on its core strengths of investment banking, trading, and asset management.
Its results in the third quarter didn’t alleviate the pressure. Profits fell 33% from a year earlier, the worst among big banks with sizable Wall Street operations, although that drop wasn’t as bad as the 58% decline in the second quarter.
Since Solomon's tenure began in October 2018, Goldman's stock has risen 50%, outperforming all major banks excluding rival Morgan Stanley (MS). Its stock is down 2% year to date.
Another challenge for Solomon to manage will be the year-end pay discussions as executives decide on bonuses for traders and dealmakers. He talked Tuesday about the decision to cut bonuses in 2022, reductions that were cited this year as one reason for declining morale at Goldman.
Solomon admitted that "the competition for top talent is still pretty intense" and "I can't tell you that we got every single person of the 45,000 [employees] paid exactly correctly," he said.
"There were definitely people that left this year that I would have liked to stay and I guarantee you next year there will be people that leave that we'd like to stay, but that's our business," Solomon said.
Many across Wall Street are bracing for more pay disappointments at the end of 2023, which turned out to be another down year for mergers and IPOs.
Bonuses in the financial service industry are expected to be flat or down for the year, according to a third quarter report from Johnson Associates. In investment banking and commercial banking, pay incentives are projected to be flat from 2022 and below levels for the three previous years.
In the New York securities industry overall average bonuses are expected to decline further this year, according to a separate analysis from the Office of the New York State Comptroller.
However, Reuters reported earlier this month that senior Goldman executives including Solomon have discussed giving larger bonuses to a small group of traders and investment bankers to retain the top talent.
The CEO on Tuesday did clear up one bit of speculation this year — whether he would continue with his side gig as a DJ. He said he no longer plays at public music events, as he once did, due to press reports about the hobby.
"It was clear that the press was making it a distraction," he said, noting that his No. 1 priority "is Goldman Sachs."
But Solomon said that doesn’t mean he has to give it up altogether.
"I’m very passionate about making music,” Solomon said. “My daughter got married a month ago. I DJ’d at her wedding."
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto and other areas in finance.
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