I've been enjoying the coverage of Greg Smith's very public resignation from Goldman Sachs this morning. Man, if you're going to do something, do it in style.
A few things to note:
- "Executive director" (ED, also known as VP) at GS London is one notch below Managing Director; these guys are well paid but not paid a fortune and have very little in the way of people managing duties. They form about 40% of the GS workforce. Greg was somewhat overhyping his position, but heck who wouldn't?
- GS paid out its annual bonuses in early February, and bonus season this year was very bloody: few people outside the big producers got much. That makes me think they paid Greg badly, but weren't intending to fire him any time soon (otherwise they'd be paying nearly a year's salary in severance) so he saw little point in hanging on.
- Greg almost certainly didn't get any significant share units in this or recent bonus seasons, otherwise he'd have hung on until later this year when they vest. This makes me think that accusations that he is only resigning now that he's flush with bonuses are somewhat wide of the mark.
- No chance anyone in the Street is going to hire Greg for anything meaningful now, he's burned his bridges; but he's a a big boy and doubtless knew what he was getting into.
- Resigning from GS, instead of being fired, means Greg can more or less say and write what he likes about life at GS. I give it 48 hours max before he signs a book deal, and 1 month max before the book comes out; he's used to working 70+ hour weeks, and there's a definite payoff if he can get a reasonable book out before the echos of this story fade.
I note that GS shares dropped 3.8% today, where MS was down 2.1%. So that's a 1.7% drop (about $1.90/share) likely attributable to Greg. GS market cap is about $62bn, so Greg cost shareholders just over $1bn. Oopsie!
Some nice commentary going on. Of all the spoofs, I liked Andy Borowitz's apology from Goldman to its clients best:
And as you read his words, you no doubt asked yourself this troubling question: how could Goldman have hired such a person?
At Goldman, we pride ourselves on our ability to scour the world’s universities and business schools for the finest sociopaths money will buy.
The main point of interest is that GS execs refer to clients as "muppets" in internal email. That's pretty stupid. Calling clients "muppets" in private conversation is rude, even if accurate sometimes, but you can get away with it. Writing it in an email that gets permanently stored and is discoverable in legal actions - well, let's just say that even Fabulous Fabrice Tourre wrote his stupid emails from his private account, which is several notches of stupidity lower than this behaviour.
Update: Interesting reactions from former GS employees on this situation.
I can't help thinking that this episode makes GS very vulnerable to another Congress-induced investigation, if some politician or Attorney General somewhere feels like making hay in the sunshine. (And why wouldn't they?)