By Saeed Azhar
NEW YORK, Oct 9 (Reuters) - With Goldman Sachs COO John Waldron firmly viewed as David Solomon's likely successor as CEO in coming years, speculation is already building among staff over who could take Waldron’s job and what other changes that would trigger through the bank's senior ranks.
A succession process has not formally kicked off at the storied Wall Street bank.
But two people familiar with the matter pointed to two key figures seen as potential candidates, among others, to replace
Waldron as chief operating officer: Denis Coleman, the chief financial officer, and Ashok Varadhan, co-head of global banking & markets, a role overseeing the bank's day-to-day operations.
Such a reshuffle could put the CFO job into play, which in turn could put three executives in the spotlight for promotion, the people said of the internal speculation, stressing that no formal Solomon succession process was underway.
Varadhan declined to comment, while Coleman did not respond to a Reuters request for comment.
"This is nothing more than chattering class speculation, and nothing reflecting real facts at Goldman Sachs," said Tony Fratto, the bank's global head of communications.
Underlining the intense focus on the firm's future direction, bets have accumulated on online platform Kalshi that other candidates besides Coleman and Varadhan are also in the running for COO.
The looming reshuffle will set the tone for the next phase of growth at the investment banking powerhouse, analysts said.
Whoever the CEO and board choose for the other top leadership roles will be able to put their stamp on the 157-year old bank that has consistently ranked as the top advisor for mergers and acquisitions, Dealogic data shows, and that is second only to JPMorgan in global investment banking revenue.
Goldman recently played a key advisory role in SpaceX's record $86 billion IPO and managed more than $1 trillion worth of announced M&A deals by June, marking a record pace for any investment bank within a half-year period.
It will report earnings on Tuesday, when the performance of its trading unit will be in focus.
SOLOMON'S FOOTSTEPS
Solomon has overseen a robust rally in Goldman's share price since taking the reins in 2018. He broke down internal silos between bankers and traders, and exited a big part of the consumer business.
He is expected to stay on as CEO until 2028, a source told Reuters earlier, after the Wall Street Journal reported that the bank had discussed a plan for Solomon to step down as CEO and be replaced with Chief Operating Officer Waldron as soon as next year. Under the plan, Solomon would remain executive chairman for one to two years after stepping down from the CEO role, the report said.
Addressing the Waldron report, Fratto had previously said that the board regularly discusses succession, but there is no definitive timeline for it.
The board gave CEO Solomon and Waldron retention packages of $80 million each last year that vest in five years, which could give an incentive to Solomon to stay on in the firm beyond 2028.
THE NEXT COO
Both Coleman and Varadhan have unique strengths they could employ as potential COO.
Coleman, 52, a former co-head of the global financing group, has overseen both revenue and non-revenue functions at Goldman, one of the sources said.
Varadhan, 54, a former swaps trader who made partner before the age of 30, co-heads banking and markets, the bank's crown-jewel division that generates about 75% of firm-wide revenue. He runs the business with Dan Dees, a prolific deals advisor.
One of the sources said that Coleman has broader experience in the firm, giving him an edge, but Varadhan is considered a top talent whom Goldman does not want to lose.
Kalshi bets give Varadhan 10% odds of becoming COO while Dees has 9%, the same as Marc Nachmann, who heads global asset management and wealth. Coleman was not listed.
KNOCK-ON DECISIONS
Even if Waldron becomes CEO within the next few years and remains in the role for a decade, the bank could look to a younger executive by the time he steps down, said William Cohan, author of the 2011 bestseller "Money and Power: How Goldman Sachs Came to Rule the World."
"Goldman has always been very good at finding the right guy at the right time," said Cohan. "My bet is after Waldron, it’s someone we don't know yet from the next level down," he said.
If Coleman is promoted to COO, the choice to replace him as CFO will center on three executives, according to the two people familiar with the matter: Sheara Fredman, the chief accounting officer, Ericka Leslie, the chief administrative officer, and Carey Halio, the global treasurer.
All three report to Coleman.
The future executive team will be tasked with steering a bank that is still largely reliant on capital markets and dealmaking, which are more cyclical businesses than durable wealth management fees.
"Any new CEO will likely be asked that question and will want to have a ready answer: how they plan to continue expanding the bank in a way that makes it less dependent on capital markets," said Stephen Biggar, bank analyst at Argus Research.
(Reporting by Saeed Azhar; editing by Megan Davies and Jonathan Spicer )
