Deeb Salem’s Naivete
Who is Deeb Salem?
An outstanding financial professional who performed outrageously well for Goldman Sachs.
However, the current dispute is that Mr. Salem believes that his bonus was not proportional to his contributions to the firm. While this basic idea is easily arguable, his basis for staying with Goldman Sachs and the firm’s right to decide on bonus distributions completely undermine his fight against GS.
A Situation Much Similar
In the early stages of my father’s career, he was an outstanding worker. While he did not work at the same level as Mr. Salem or with the same prestige, he was of value to his firm.
So what does this have to do with Deeb Salem?
My father’s boss had promised him a pay level proportional to how well he performed for the firm. In a verbal agreement, my father was to receive the other half of his desired salary after a decided trial period. The pay was exactly what my father had expected, deserved, and was looking for. After this time period, my father approached his boss and essentially said “Well, I’ve done everything you asked and performed to/above your expectations. When can I expect the other half of my compensation?” His response? ”What are you talking about?
Flustered, my dad went to the CEO (the firm was small) and mentioned the deal his boss and him made. Unfortunately, the CEO’s brutal response was ”if it’s not in paper, it means nothing.”
This was a hard learned lesson for Deeb Salem. Boasting he made 7 billion dollars for GS and only receiving only slightly above half his expected bonus, Mr. Salem has filed a lawsuit against Goldman Sachs for his “deserved” compensation. An executive above him boasted that he was “a steal at $15 million”… While the implications of a $15 million bonus are present, there is nothing binding Goldman Sachs to act on those words.
The ultimate result of this dispute will likely be that Salem receives nothing for his troubles, only perhaps the lawyer fees that come with fighting an investment banking behemoth.
And now I extend my question to you, WallSteetOasis community, do you feel that Goldman Sachs, while it may seem unfair, should act on Salem’s request? Or do you feel that, without a written contract, Mr. Salem has no concrete basis for his arguments?
Unfortunately, if it's not in writing it's very difficult for him to win. A verbal contract can go far but if his direct superior or someone above him/her didn't say you'll get $15MM based on $X performance (or his contract didn't have a quantifiable metric) and he only expected it based on past performance there's not much of a case. I've only read the Bloomberg article on it and maybe details were left out, but another senior trader told him he was a steal for $15MM. That and a subway token gets him on the subway.
Moral of the story: get everything in writing. I've had it backfire against me and since the first time it happened I make sure I get everything in writing, and that's not only with a behemoth like GS, that's with friends and long time partners. When big dollars come into play people will fuck you over, regardless of the entity or person.
Can someone more informed tell me why they can't pay the guy? If his claims are true, on a relative basis to his contributions, it seems ridiculous that they can't pay him what he is asking.
EDIT: Never mind, just saw that he is asking for it even after leaving. Lol, yeah not going to win.
From what I can tell, it's not just about the leaving aspect (or having left I believe), it's because the bonus was discretionary. If he had had a contract that said he got X% of $Y profit they'd have to pay it to him regardless (slightly simplified because there may be clawbacks over time and penalties if you leave, not certain of how traders do it specifically) but because it's discretionary they get discretion to decide what to compensate him as a bonus. Like I said I'm only basing this off the Bloomberg article and I'm sure GS had a better PR machine than this guy, but one of his public system was that he told his mom about it. That holds even more water than another trader saying he's at steal at $15MM.
It is shocking to me how stupid Deeb Salem is in this situation. For someone at his level to think a verbal agreement means anything guaranteed is beyond naive. I've met plenty of people who are very smart/talented in one area and completely clueless in others and that seems to fit the description of this guy well. Unfortunately, most of the people that fit this description are traders or quants (and no, I'm not saying most traders/quants are like this, just that most people in finance who are smart and naive are traders/quants).
Deeb likely knows his claim is meritless, but he hopes GS will pay him something so he will go away.
There is in fact nothing naive about what he's doing.
Who gives a shit if its in writing or not. That has absolutely nothing to do with what he's doing. Neither side is banking on the intersection of the the facts of the case and the case law to tilt the scales in their favor. Are you so naive as to think that the motivation behind Salem's suit is to go to trial and have a judge/jury decide his fate?
Do correct me if I'm wrong but your dad was likely not "shortchanged" the better half of $10 million? In which case, the situations are not similar at all. If your dad was shortchanged a couple of hundred K (if that), its not really worth it for him to rock his career boat, expend stress/energy to sue, and expend money to sue in order to eventually get to a settlement where he get's a fraction of the sum that is up for contention. That's not worth $50-150k (gross of legal fees), to anyone other than a menial worker making $30k a year.
For Salem there are several millions of dollars that hang in the balance and innumerable billions hanging in the balance for GS reputationally.
Even if its in arbitration or whatever... it doesn't matter. Once this hits discovery (which it never will) and GS is legally forced to have their IT guys mine and produce the cesspool of damning e-mails, its going to be like a diarrhea napalm bombing. They will never let that happen.
Other than the very very few cases of a complete and shameless shakedown that will set a coming-out-of-the-woodwork precedent, corporations (especially ones who live and die by their professional/advisory/pseudo-fiduciary reputations) settle. The whole pre-settlement song and dance is so each side can effectively play their hand the best way they see fit to posture how much leverage they have ahead of the settlement. That's what this is.
Salem will pay his attorneys a few hundred K, if he even ends up having to foot the bill, and GS will end up paying him some number of millions of dollars. GS's angle here is probably to drag this out for 6-18 months for the sensationalism of it to fizzle and for everyone to forget about it and then settle in order minimize any more PR than its already gotten.
I'd normally agree with the premise that Goldman would let the suit get out of the spotlight then settle for something that's non-material to GS but in fact a shit load of money to a normal human being, but the precedent they set by settling could bring more than a few cases of shameless shakedowns and they may fight this one. A bunch of lawyers, especially the contingent lawyers, could come out of the woodwork. It's the same reason retailers like grocery stores don't pay for a slip and fall: once they settle one for a few thousand, every lawsuit happy bastard will come in and throw a grape on the floor and pretend to fall (invested in a grocery store chain once and I found it interesting that they'd blow $20K in legal fees to defend against a $5K slip and fall lawsuit). But I could be wrong.
On a different tangent, I always thought traders, especially at the the upper levels, ran their own P&L and got a defined % of the profit? I could swear that guys I've known who are traders have said that. But again, I could be wrong.
Agreed, the precedent setting nature of settling this case means they probably will take it to trial if Deeb keeps pressing. I would guess that 95% of employees at Goldman think they're underpaid, since that's human nature. I guarantee you people at GS will be following this case, especially those most likely to sue in the future.
Corporations usually do settle, because usually they actually did something wrong, even if it's not as bad as was claimed by the prosecution. Highly doubtful in this instance. Deeb probably just heard what he wanted to hear.
That is a lot like suing the government. Essentially infinite legal resources vs his savings.
You don't want to be sitting across the table from Cravath (or whoever) holding less than a cocktail napkin.
Silver lining: Not that I didn't know this already, but you must get everything on paper. Even written confirmation by email would be sufficient. SOMETHING... verbal can not be tracked. Even with GS.
New York is a one-party consent state. If you're a sneaky snake you don't have to let them know you're recording the conversation.
Cravath would eat you alive.
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