As Wall Street firms struggle to hold on to top talent, Goldman Sachs Group Inc. isn’t just paying bigger bonuses to dissuade executives from leaving — it’s turning the screws on those who do.
For decades, Goldman has cultivated close ties with departing executives, nurturing the corporate world’s most powerful alumni network. They often establish lucrative, second careers and then enlist Goldman for advice, deals and trades. It’s a connective tissue for a lifetime of shared riches.
But new pressures are leading to strained exits at the banking powerhouse.
A year ago, the firm was heralding Omer Ismail, 42, as its future. Then the Goldman lifer and a deputy, David Stark, left to run a banking startup backed by Walmart Inc., drawing the wrath of Goldman’s leader, David Solomon.
As retaliation, Goldman is now exploring the nuclear option of confiscating their vested stock — usually reserved for cases of misconduct, and not wielded against executives taking new jobs. It’s just one of the ways the bank is playing hardball with those who leave.
Other surprise measures include pulling unvested compensation from long-time loyalists like former division chiefs Gregg Lemkau and Eric Lane — who left for firms that would be considered clients. It’s part of a pattern of expanding the list of what counts as a competitor to enforce more restrictive exit agreements.
Like other Wall Street leaders, Solomon has been frustrated by the escalating turnover through the pandemic that’s forced firms to sweeten rewards for rainmakers to levels not seen since the financial crisis. But there are also more punitive ways to send a message to senior executives weighing their options. Goldman is willing to make it very costly for those wanting to jump ship.
This look at Goldman’s handling of recent departures is based on conversations with eight people familiar with the bank’s decisions. They asked not to be identified discussing private personnel matters.
“Equity awards are governed by the agreement signed by the recipient,” said Patrick Scanlan, a spokesman for Goldman. “In each case mentioned by Bloomberg, there were explicit terms which were upheld.”
Representatives for Lemkau, Lane, Ismail and Stark declined to comment.