Let's face it. Everyone loves it when an employee lets loose on a big company, but when that firm is as despised and successful as Goldman Sachs, the feeding frenzy is about as delicious as the offerings at the company's cafeteria.
Greg Smith, the Goldman Sachs employee who ripped his former employer in an op-ed when resigning, appears from all accounts to be a genuinely ethical person caught up in what he increasingly viewed as an unethical business, leading other employees to say they agree on the "toxic" environment, according to Business Insider.
Smith worked at Goldman Sachs through years of what had been called unscrupulous dealings, so why would Smith leave now?
Henry Blodget, CEO and editor of Business Insider, said it was "highly unlikely" Smith, Goldman Sachs' former head of equity derivatives business in Europe, the Middle East and Africa, was forced out before he wrote the New York Times op-ed, saying that fact would have been "the first thing" the investment bank would have mentioned in its response.
Instead, the firm issued a statement saying, "We disagree with the views expressed, which we don't think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves."
CEO Lloyd Blankfein and COO Gary Cohn quickly defended the company and its culture in a memo to employees on Wednesday, saying "in a company of our size, it is not shocking that some people could feel disgruntled," the memo stated. Analysts note it may be challenging for Smith, or anyone else who has burned bridges, to get a similar job again.
Blodget said the company portrayed Smith as "a disgruntled peon in a dead-end job with few responsibilities."
Reports show former employees nodding in agreement to Smith's opinions of the company's culture, and a combination of Smith's ideals and other factors may have led to his resignation.
"If Goldman had also been able to say "he got mad because we canned him," I suspect they would have," Blodget said.
Brad Hintz, research analyst with Sanford C. Bernstein & Co., said it is important to note that the derivatives business, which most simply involves trading contracts of underlying assets, which were equity assets in Smith's case, is transforming. Under new regulations, like the Dodd-Frank Act, the "old, opaque business of customized derivative is going to be transformed to a more open business with readily available pricing and narrower margins," he said.
"The number of bespoke derivatives professionals on Wall Street is falling."
Amitav Misra, a friend of Smith's and an energy executive in Houston, said Smith has a "clear moral compass."
"The letter was unexpected, but the conviction and sentiment were not at all surprising," he said.
Smith was apparently on a fast track to success, as he was promoted directly from an analyst role to associate, then vice-president without a degree from business school, and reportedly had a history of being a high-performer.
When asked whether Smith was hoping, but failed, to get a promotion, Blodget said the firm would have been justified in mentioning that information as well.
"Yes, it's certainly possible that he was hoping to be promoted or to be given a big bonus, and wasn't, and that was the final straw," he said. "But I think if he had asked to be promoted--or was otherwise seeking promotion--and was actively denied, I think Goldman would probably have mentioned that, too."
Firms like Goldman Sachs can ask employees to resign with the incentive and disincentive of paying or withholding their bonuses, which include cash and unvested deferred compensation. The deferred compensation is typically stock and payable in three to five years, Hintz said.
A managing director at a Wall Street firm has a large deferred compensation account that vests over time. When an employee leaves his or her firm he or she loses the deferred, or unvested, compensation.