Succession Drama Builds at Goldman, With Co-CEO Talk Spreading

Senior executives inside Goldman Sachs, as well as former partners, are floating a possible succession plan should the investment bank’s board of directors decide to move on from its embattled Chief Executive Officer David Solomon. 

The arrangement, which remains at a speculative stage, would harken back to Goldman’s days as a private partnership when it was sometimes led by co-CEOs. In the scenario being discussed at the highest levels, Jim Esposito, currently the London-based co-head of global banking and markets, and Marc Nachmann, currently global co-head of asset and wealth management, would replace Solomon and serve as co-CEOs. 

Both Esposito and Nachmann are often mentioned as potential successors to Solomon should questions about the current CEO’s personal behavior and use of company resources – along with the bank’s failed attempt to transition into more retail-consumer-based services – lead the board to decide a change is needed. 

John Waldron, Solomon’s deputy and currently president and chief operating officer, has been seen as heir apparent to Solomon. 

But six current senior Goldman executives and former partners at the firm said in interviews that Waldron is too closely tied to Solomon. If Solomon should exit in the near term, they said the combination of Esposito as the more comforting, public-facing leader and Nachmann as the inside operator known for a relentless focus on strategic execution would make sense. 

“They are close, they work extremely well together and have complementary skill sets, that’s why I see it a potential solution,” said one top investment banker and partner at Goldman, who, like others interviewed for this story, declined to be identified by name to speak frankly about highly sensitive internal matters. 

One former Goldman partner called an Esposito-Nachmann combination “interesting” and said the pair “works quite well together.” A second current Goldman executive said if the bank’s partners could vote, “an Espo-Nachmann ticket would run the table.” “Espo” is Esposito’s nickname inside the firm.  

Esposito and Nachmann declined a Messenger request to comment for the record. A Goldman spokesperson did not respond to a Messenger request for comment. 

To be sure, the Goldman board, which recently completed a meeting in India, has not indicated publicly or privately that it is considering the removal of Solomon. And even those pushing the co-CEO idea say their expectation remains that Solomon will survive despite a raft of negative headlines and strategic tumbles, including the failed effort to make Goldman a bigger brand in retail consumer finance.

“I’d still take the under on Solomon getting replaced,” the first current senior Goldman executive said, using a betting term to suggest that Solomon staying remains the most likely outcome. But this executive and one other noted that the bank’s next quarterly earnings report, due out July 19, is widely expected to be poor and could put the board under further pressure to consider a new leadership structure. 

There are other scenarios being floated by current executives and former partners. They include tapping Richard Gnodde, currently CEO of Goldman Sachs International, to replace Solomon. Several have also mentioned  the possible return of former Goldman CFO Stephen Scherr to take the reins. Scherr is now CEO of Hertz.

What is clear at the moment is this: there is a great deal of internal concern at Goldman about Solomon and furious jockeying behind the scenes among those who would like the CEO job.

A co-CEO arrangement would be unique for Goldman in the years since the storied Wall Street titan, long a privately held partnership, became a publicly traded company in 1999. But it was not unheard of in the partnership years that date to 1869. 

John Whitehead and John Weinberg served as co-senior partners in the 1970s. And Robert Rubin, later U.S. Treasury Secretary, served as co-senior partner with Stephen Friedman in the early 1990s. 

Part of the internal push for a co-CEO arrangement is a desire to return the culture of the now-public bank to its origins as a privately held company with limited public visibility.  

A co-CEO arrangement would not be the only way to achieve this. 

One former top executive and partner at the bank suggested the board could appoint a powerful executive chairperson to play a significant role alongside a single new CEO who might be viewed as not quite ready for the top job alone. 

Among those potential lone CEOs who would be paired with an executive chair are Nachmann, Esposito and Ashok Varadhan, co-head of global markets. 

“I could see co-CEOs,” the former top executive and partner said. “But I could also see bringing in a powerful executive chair on the board to assist a single new CEO at least for a couple years.”

Any move by the directors would rely heavily on the advice of John Rogers, Goldman’s chief of staff and secretary to the board. Rogers has been a powerful behind-the-scenes operator and board-whisperer at Goldman for decades after serving in various senior government jobs in Washington. 

The Messenger previously reported that Rogers had told multiple people inside the firm that he had grown tired of the headlines generated by Solomon and was ready to move on to a new CEO. Goldman spokesman Tony Fratto has strongly denied that report and said Rogers retains full confidence in Solomon.