The Goldman Bankers Considered Most Likely to Replace Gary CohnBy and
Schwartz, Solomon, Chavez among those said to be on short list
Cohn accepts offer to become Trump’s top economic adviser
As Goldman Sachs Group Inc.’s Gary Cohn prepares to decamp for a Trump administration job in Washington, there’s no shortage of bankers lined up to replace him.
Cohn, the firm’s president and chief operating officer, will become assistant to the president for economic policy and director of the National Economic Council, President-elect Donald Trump said Monday in a statement.
Among potential replacements for Cohn, who has been in line to succeed Chief Executive Officer Lloyd Blankfein, are seven executives on the bank’s management committee: Harvey Schwartz, David Solomon, Stephen Scherr, Marty Chavez, Eric Lane, John Waldron and Pablo Salame, people familiar with the process have said.
While Schwartz and Solomon are considered front-runners, it’s not clear how the roles may be divided. Blankfein, 62, could choose two executives to split Cohn’s duties, naming each as co-president and co-COO, as he did in 2006 in assigning the titles to Cohn and Jon Winkelried. He also may choose a different configuration, designating one as president and the other as COO, or name someone else to what’s considered the stepping stone to the CEO’s chair.
For those bypassed for the clear No. 2 job, Blankfein has a number of options to appease them. The CEO could name one or more of them as vice chairman, an honorific and a nod to those executives deemed instrumental to the firm’s success. Vice Chairmen Michael Sherwood and Mark Schwartz, considered close associates of Blankfein’s, have announced their plans to retire this year. Blankfein could also sweeten the deal for an executive getting a smaller role by awarding that person a larger pay package.
Here’s the background of the executives thought to be in the running for Cohn’s job, listed in order of likelihood, the people familiar with the company’s politics have said:
Schwartz, 52, was named chief financial officer in January 2013 after 15 years at the company. In one of the most visible roles at the Wall Street firm, Schwartz has slashed almost $1.5 billion in expenses as the bank copes with a revenue slump brought on by increased regulation and stubbornly low interest rates.
Schwartz, whose pay package for 2016 totaled $27.7 million, joined Goldman Sachs in 1997 as a vice president in the currency and commodities-trading unit, which was then managed by Blankfein and Cohn. Schwartz, a 6-foot-4 graduate of Rutgers University, later joined the investment-banking division as co-head of a new financing group in 2004.
In February 2008, two weeks before Bear Stearns Cos. collapsed, Schwartz became one of four co-heads of global sales and trading. After being named a member of the risk committee two months later, Schwartz was forced to wrestle with decisions about how to protect Goldman Sachs and allocate capital as the crisis led the firm to sell assets and hold more cash and other liquid securities.
Blankfein, Cohn and Schwartz have resisted investors’ calls in recent years to pull back on fixed-income trading as revenue from the unit slumped, instead urging patience even as competitors including Morgan Stanley scale back.
Solomon, 54, succeeded Winkelried as co-head of investment banking in July 2006 as one of Blankfein’s first appointments. Solomon joined Goldman Sachs in 1999 from Bear Stearns as co-head of the high-yield debt and leveraged-finance division before becoming co-head of equity capital markets in 2002.
While the investment-banking co-heads share responsibilities, Solomon is the primary leader of the day-to-day business, with a focus on efficiency and profit. His name has long been on a short list of potential successors to Blankfein or Cohn, and was part of the group known as Goldman Sachs’s “brain trust" during the financial crisis, according to Andrew Ross Sorkin’s 2009 book “Too Big Too Fail."
Solomon was on the phone with Blankfein, Cohn, Winkelried and then-CFO David Viniar as the group engineered a deal to sell Warren Buffett $5 billion worth of stock in the form of preferred shares with a 10 percent dividend as well as warrants that allowed him to buy additional shares, according to Sorkin’s book. The deal came the day after Goldman Sachs was named a bank holding company in September 2008 as investors worried whether it would need additional capital to stay afloat.
Chavez, 52, was named chief information officer in December 2013 after being appointed to the management committee earlier that year. The Albuquerque, New Mexico, native holds a doctorate in medicine from Stanford University and bachelor’s and master’s degrees from Harvard University, where he took a course on Literature of the Weimar Republic.
Chavez joined Goldman Sachs in 1993, working in the currency and commodities division that also produced Cohn, Blankfein and Schwartz. He left the firm in 2000 and founded Kiodex Inc., which offers risk-management services to energy companies. Chavez rejoined the bank in 2005, was named a partner the next year and has overseen Goldman Sachs’s principal strategic investments group.
A former director of the International Swaps & Derivatives Association, Chavez has said he’s nostalgic for the boisterousness of the trading floors of the past as traders are now quiet because “everyone’s instant messaging.” Still, he said he’s excited about the opportunities technology brings to banking.
“The possibility of software eating the world -- you can be nervous about it or you can be excited about it,” Chavez said at a philanthropic event in May. “It’s a choice. I’m choosing to be excited about that transformation.”
Scherr, 52, has been chief strategy officer since June 2014 and took over as CEO of Goldman Sachs’s bank in May. The firm has been building out its banking operations under his leadership, completing the purchase of General Electric Co.’s online bank and debuting Marcus by Goldman Sachs, an online-loan service that targets consumers with credit-card debt.
Scherr joined Goldman Sachs in 1993, working in the fixed-income trading division from 1996 to 1999 before moving to investment banking. A partner since 2002 , he was appointed to the management committee in January 2012.
He took over Goldman Sachs’s underwriting business in 2008, leading it to the top spot in debt underwriting for the first time in its history. The group produced a record $4.03 billion in 2013, his last year at the helm, and also ranked first in global equity offerings. Before running the financing group, Scherr spent two years as COO of the investment-banking division.
Salame, 50, was named co-head of the securities unit in 2008 after joining in 1996 as part of the emerging-markets currency-trading group. He was named partner in 2000 and assigned to help lead the global emerging-markets debt group. Two years later, he moved to London where he later became co-manager of global credit, mortgages, emerging markets trading and equity derivatives before taking on his current role. He returned to New York in 2011.
He leads the partnership committee, a panel that helps define the experience of being a partner.
A native of Ecuador, Salame won his doubles tennis event in the inaugural Finance Cup in 2015, helping the U.S. team top the European squad. He’s also a member of the board of trustees at Brown University.
Lane, 42, was named co-head of the investment-management division in December 2011 after working in the unit for 10 years. The business oversees private equity and hedge funds and handles money for wealthy individuals, and Blankfein has made expanding the unit a priority.
Lane, who former Goldman Sachs executives have said is close to Cohn, joined the firm in 1996 and was named partner in 2002. He was appointed to the management committee in 2012 and, like Solomon, donated to Republican Jeb Bush’s presidential campaign last year.
The investment-management division, with Tim O’Neill as its other co-head, has seen total assets managed climb more than $500 billion to $1.35 trillion since Lane took the post, according to company filings. Lane and O’Neill, who’ve made nine acquisitions in their time running the business, have said they want to increase the unit’s revenue by more than 10 percent a year.
Waldron, 47, was named co-head of the investment-banking division in December 2014, joining Richard Gnodde and Solomon. He was named to the management committee with the promotion.
During Waldron’s first year co-heading the unit, Goldman Sachs topped the league tables, advising on more than $1.41 trillion of deals -- a record for the firm. He joined Goldman Sachs in 2000 after following Solomon from Bear Stearns, was appointed partner in 2002 and became co-head of leveraged finance in 2005.
He briefly moved to London in 2007 to become co-head of the European financial sponsors group, building a team that advises European private equity firms.
— With assistance by Jennifer Jacobs