Not Just a D.J., Goldman C.E.O. Also Dabbles in Luxury Real Estate
On Feb. 28, top executives at Goldman Sachs staged an “investor day” to reassure shareholders that the bank would rebound after a disappointing 2022. Barely an hour after the event ended, Goldman’s chief executive, David Solomon, boarded one of the company’s Gulfstream jets en route to the Bahamas.
His destination was the exclusive Baker’s Bay resort, which features a world-famous golf course and a deepwater port large enough to accommodate residents’ superyachts. More than a decade earlier, Mr. Solomon had purchased a multimillion-dollar beachfront home from the Discovery Land Company, which built and managed Baker’s Bay.
Mr. Solomon is not just a Discovery customer. He’s also a part owner of the private company and for years has informally advised its founder — even as Goldman Sachs vied for work with Discovery.
Many corporate chief executives, of course, sit on other companies’ boards of directors, but such external commitments are much less common in the heavily regulated banking industry. Regulatory filings by most of Mr. Solomon’s counterparts on Wall Street do not reveal similar outside business activities.
Mr. Solomon’s relationship with Discovery raises questions about the potential for conflicts of interest and distractions from his day job running an elite Wall Street bank.
Tracy Yue Wang, the chairman of the finance department at the University of Minnesota’s Carlson School of Management, said a conflict could arise if Mr. Solomon ever had to choose between advancing Goldman’s business and nurturing his personal investment in Discovery.
“It’s definitely not good corporate governance practice,” she said.
Stephen Lubben, an expert in corporate governance and business ethics at Seton Hall Law School, said Goldman’s regulators and shareholders might worry about Mr. Solomon becoming distracted. “Running a major financial institution is very much a full-time job,” he said.
Over the past two years, Mr. Solomon has used Goldman’s corporate jet more than 20 times to fly to Discovery properties, including those where he doesn’t own homes, according to flight records reviewed by The New York Times and people familiar with Mr. Solomon’s travels.
In a regulatory filing, Mr. Solomon said he spends “less than eight hours per year” as a “passive board observer” for Discovery.
Tony Fratto, a Goldman spokesman, said Mr. Solomon’s investment in Discovery was in the “single-digit millions.” He said Mr. Solomon has no fiduciary responsibilities toward Discovery and “is not involved in the business operations” of the company.
Mr. Fratto said there was “no conflict whatsoever” between Mr. Solomon’s job at Goldman and his relationship with and investment in Discovery. “It’s absurd to think he’d guide his decision-making here for such a small personal investment,” he said. Mr. Fratto said Mr. Solomon reimburses Goldman when he uses its jet for personal reasons.
Jill Basinger, Discovery’s chief legal officer, said that Mr. Solomon was only a small investor in the company and that it had never done business with Goldman.
This is not the first time questions have surfaced about how Mr. Solomon’s outside interests affect his work at Goldman, for which he has received more than $150 million in compensation since he became chief executive in 2018.
Some bank employees have privately grumbled that his hobby performing as an electronic dance music D.J. is a distraction, especially with Goldman in the financial doldrums and laying off thousands of employees. On occasion, Goldman employees have helped manage Mr. Solomon’s D.J. performance schedule, The Times previously reported.
Mr. Fratto said the D.J. work was separate from Mr. Solomon’s day job. “I think The New York Times is trying to make this a pattern,” Mr. Fratto said.
Mr. Solomon has long been friends with Michael Meldman, the ultrawealthy co-founder (along with actor George Clooney and former model Rande Gerber) of the tequila brand Casamigos.
Discovery, which Mr. Meldman founded in 1994, builds small complexes of mansions, generally alongside a golf course and outdoor recreation area. They serve as something akin to summer camp for the rich and famous. They are staffed with sports trainers to help members learn activities like kite boarding. Members can golf barefoot or in bathing suits and visit “comfort stations” — miniature candy stores or replicas of New York delis — between holes.
Mr. Solomon bought a Baker’s Bay mansion in 2011. Over the years, he and Mr. Meldman became close. Mr. Solomon has been a D.J. at Mr. Meldman’s birthday party, at Baker’s Bay New Year’s Eve celebrations and at the opening of Discovery’s private beach club, Dune Deck, in the Hamptons.
The more time they spent together, the more ideas Mr. Solomon expressed about how Mr. Meldman should run the business, according to three people familiar with their relationship. “He advises Mike when Mike asks him questions,” Mr. Fratto said. “Is that unusual? Not at all.”
Mr. Meldman in 2018 invited Mr. Solomon to an event at the Four Seasons restaurant in New York with Danilo Medina, then the president of the Dominican Republic. One of the goals of the dinner was to persuade Mr. Medina to build a new airport on the island that would be used exclusively by Discovery and its members, according to two people familiar with the dinner.
Mr. Fratto said Mr. Solomon attended the dinner but did not push for the airport, which was never built. (A representative of Mr. Medina did not respond to a request for comment.)
In 2017, Bryan Slotkin, a managing director at Goldman who regarded Mr. Solomon as a mentor, left the bank to join Discovery. Once there, he introduced a team of real estate lenders in Goldman’s asset management division to Discovery employees who were managing a resort and housing development in Cabo San Lucas, Mexico, according to people familiar with the discussions.
While the resort, called Chileno Bay, was run by Discovery, it was owned by a group of outside developers. Those developers had previously taken out a $40 million loan from another lender.
Following Mr. Slotkin’s introduction, Goldman bought and then expanded the loan. A Discovery employee and a representative of the owners soon negotiated with Goldman bankers to refinance it.
The Discovery employee reported to colleagues, including Mr. Meldman, that Goldman had “accepted some meaningful terms the Borrower requested,” according to an email reviewed by The Times. Describing the progress as “very exciting,” the employee said Goldman was offering relatively low fees. Refinancing with Goldman instead of finding a new lender would be cheaper, according to “every broker or lender we have spoken with in the marketplace,” the employee wrote. The deal went through in 2020.
Mr. Solomon was not involved in the refinancing, Mr. Fratto said. The Goldman employees in charge of the division that made the loan knew of Mr. Solomon’s friendship with Mr. Meldman, according to a former Goldman executive.
Another team of Goldman bankers, meanwhile, met with Discovery executives to pitch them on other services. Discovery was hoping to raise money by selling shares of itself to a select group of outside investors. It marked an important milestone for the private company, which until then had not offered equity to outsiders.
To prepare for the pitch, Goldman’s team pored over Discovery’s finances to determine how much the company was worth. They estimated that its value was substantially below $1 billion.
That was less than Mr. Meldman had hoped. Mr. Solomon personally delivered the disappointing news to his friend, according to two people familiar with the discussion. Goldman did not win the assignment.
Mr. Fratto said the lower-than-expected valuation showed that Goldman was not giving special treatment to a company with ties to Mr. Solomon.
In early 2021, Discovery completed the private fund-raising, without the help of a bank. The company sold $300 million of shares to investors including Mr. Solomon. Now he was more than a Discovery adviser — he was also a part-owner.
Mr. Fratto said Mr. Solomon’s investment was approved by Goldman’s compliance department. He said Mr. Solomon would have to recuse himself from any future decisions involving Discovery.
Shortly after the fund-raising, Discovery created an advisory board. Mr. Solomon was granted “observer” status, meaning he could attend meetings.
Last September, the group gathered in Beverly Hills, where Discovery has offices. Mr. Fratto said that was the only meeting Mr. Solomon attended.
Flight records show that, since his investment in Discovery, a Gulfstream jet that is almost exclusively used by Mr. Solomon has flown roughly once a quarter to locations like the Hamptons, the Masters golf tournament in Augusta, Ga., and Baker’s Bay. Mr. Meldman’s Gulfstream was at those locations at the same time.
In January, Mr. Solomon spent a weekend at Discovery’s resort in Cabo San Lucas. That Monday, he flew to Los Angeles and watched the college football championship game from a private box alongside several Discovery executives and investors, including Mr. Meldman. Kelley James, a musician who often performs at Discovery properties, posted a photo of the group on Instagram.
Mr. Fratto said the trip and the game had nothing to do with Discovery.
“This guy spends all his time on Goldman Sachs work,” he said. “He’s obsessed with Goldman Sachs.”
Matthew Goldstein and Hogla Betiza contributed reporting.