NEWYORK, February 23 (Reuters Breakingviews) - David Solomon is down on former employees with the force of his biblical nameake. The Goldman Sachs leader may stock the Wall Street bank previously issued to Omer Ismail and David Stark, who jumped ship last year to start a new financial business for Walmart, according to Bloomberg. The move suggests Goldman has more competitors than previously. However, such actions can send negative signals.
Bankers who join rival institutions are usually resigning for a delayed stock that has not yet been vested. What's particularly sluggish in Ismail and Stark's case is that the bank is confiscating shares they had already received. Goldman gives some senior executives equity that vests over a three-year period but cannot be sold for five years. This is, however, a dangerous move.
Solomon's decision reflects the significance of the defection. Marcus, a consumer banking company, has built a strong solid ground in the industry, from major banks like JPMorgan and Citigroup to fintech businesses like PayPal. Walmart, which is backed by Ismail, is a powerful new competitor.
Goldman has tended to take a strange view when top bankers leave to join a client. Unlike former employees who were satisfied on good terms, Solomon is likely to hire the firm in the future. However, he is less concerned about his bank's relationship with the $380 billion retailer than punishing Ismail.
Wall Street is in the middle of a talent war, so Goldman Sachs might be hesitant to leave. However, reminding employees that it can control their wealth even after they leave might backfire. It's a relief for investors, that Goldman Sachs is battling on more fronts than before. Managing that will take all of Solomon's judgement.
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NEWS IN CONTEXT
Goldman Sachs is considering transferring stock from two former employees after they had received it, according to Bloomberg on February 23, citing people familiar with the bank's decisions. Walmart, a giant company, has ruled out stock awards over three years, but they aren't allowed to sell them until after five years.
Goldman Sachs has also withdrawn unvested shares from Gregg Lemkau and Eric Lane, who have left the firm recently, according to Bloomberg.
"Equity awards are governed by the agreement signed by the recipient. "In every case mentioned by Bloomberg, there were explicit terms which were upheld," a spokesperson for the bank said.
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