TABLE B-1
Analytical framework of Goldman Sachs
1979 1990 1996 1999 2012
Head of firm (background)/#2* Weinberg (banker) Friedman (banker) Corzine (trader) Paulson (banker) Blankfein (trader)
Whitehead (banker) Rubin (trader) Paulson (banker)* Thain/Thornton (banker/multi)* Cohn (trader)*
Organizational characteristics
Private/public structure Private partnership Private partnership Private LLC Public corporation Public corporation
Investment bank (IB)/Bank IB IB IB IB Bank
Liability Personal Personal Limited Limited Limited
Ownership 100% partners 87.5% partners, 12.5% Sumitomo 82.5% partners, 12.5% Sumitomo, 5% Bishops 48% partners, 12% public, 40% other 11.5% partners, 8% Berkshire, 80% public/other
Compensation
Partners/Nonpartners
Fixed %
cash
Fixed %
cash
Fixed %
cash
Fixed % plus discretionary
Cash and stock
Discretionary plus fixed %
Cash and stock
Partner liquidity Starting at retirement Starting at retirement Starting at retirement Public market with vesting Public market with vesting
Partner election Every 2 years Every 2 years Every 2 years Every 2 years Every 2 years
Partner titles Partner Partner MD MD MD
Departnering process Public Public Public Not public Not public
Partner compensation philosophy % based on tenure % based on tenure and performance % based on tenure and performance % based on tenure/performance and comparables Discretionary and % based on tenure/performance and comparables
Employee compensation average Below peers Below peers Below peers At peers Above peers
Regulation
Number of business principles 12 12 12 14 14
Clients’ interests first Yes Yes Yes Yes Yes
Shareholder returns No No No Yes Yes
Board 100% partners 100% partners 100% partners Majority “insiders” Majority “outsiders”
Banking activities Glass–Steagall Glass–Steagall Glass–Steagall Glass–Steagall repealed Dodd–Frank
Competition
Employees US IBs US IBs US IBs US IBs, banks, foreign banks, tech firms, hedge funds, private-equity firms US IBs, banks, foreign banks, tech firms, hedge funds, private-equity firms
Turnover ~5% ~5%–10% ~20%–25% ~20%–25% ~20%–25%
Capital GS private GS private GS private GS private GS private
(competitors public) (competitors public) (competitors public) (competitors public) (competitors public)
Clients
No-hostile policy Yes
Limited
Yes
~20%
No
~30%
No
~40%
No
40%–50%
International
HF dedicated group No No No No Yes
PE dedicated group No No No Yes Yes
GSAM No Yes Yes Yes Yes
Average tenure of CEO ~8 years ~7 years ~6 years ~6 years ~5 years
Returns
IB % revenues >50% ~50% ~30%–35% ~30%–35% ~10%–15%
Prop % revenues <10% <10%–20% ~20%–30% ~60%–70% ~50%
Technology
Voice mail No Limited Yes Yes Yes
e-mail No No Limited Yes Yes
Credit derivatives No No Limited Yes Yes
Note: This table is based on publicly filed information and general consensus of estimates from interviews. Much of the information has not been reported by Goldman, especially prior to Goldman, is subjective, and requires varoius assumptions and interpretation.
Appendix C
Selected Goldman Employees and Lobbyists with Government Positions (Before or After Goldman)
JOSHUA BOLTEN
Government: President George W. Bush’s chief of staff, 2006–2009; director of Office of Management and Budget, 2003–2006; White House deputy chief of staff, January 20, 2001–June 2003
Goldman: Executive director of legal affairs for Goldman based in London (the bank’s chief lobbyist to the EU), 1994–1999
KENNETH D. BRODY
Government: President and chairman of the Export-Import Bank of the United States, 1993–1996
Goldman: Former adviser and board member of the management committee at Goldman, where he worked from 1971 to 1991
KATHLEEN BROWN
Government: Former California state treasurer
Goldman: Senior adviser responsible for public finance, western region
MARK CARNEY
Government: Governor of the Bank of Canada since 2008
Goldman: Thirteen-year career with Goldman; left in 1995
ROBERT COGORNO
Government: Former aide to Richard Gephardt (D.-Mo.) and one-time floor director for Steny Hoyer (D-Md.), the number two House Democrat
Goldman: Works for [Steve] Elmendorf Strategies, which lobbies for Goldman
KENNETH CONNOLLY
Government: Staff director of the Senate Environment and Public Works Committee, 2001–2006
Goldman: Vice president at Goldman from June 2008 to present
E. GERALD CORRIGAN
Government: President of the New York Fed, 1985–1993
Goldman: Joined Goldman in 1994, currently a partner and managing director; also appointed chairman of GS Bank USA, the firm’s holding company, in September 2008
JON CORZINE
Government: Governor of New Jersey, 2006–2010; US Senator, 2001–2006, where he served on the Banking and Budget committees
Goldman: Former Goldman CEO; worked at Goldman from 1975 to 1998
GREGORY CRAIG
Government: White House Counsel in Obama administration
Goldman: Took position as Goldman’s chief lawyer to defend against an SEC suit
GAVYN DAVIES
Government: Former chairman of the BBC, 2001–2004
Goldman: Chief economist at Goldman, where he worked from 1986 to 2001
PAUL DIGHTON
Government: Chief executive of the London Operating Committee of the Olympic Games (LOCOG)
Goldman: Worked at Goldman for twenty-two years beginning in 1983
MARIO DRAGHI
Government: Governor of the Bank of Italy since January 2006; since 2011, President of the European Central Bank
Goldman: Vice chairman and managing director of Goldman Sachs International; member of the firmwide management committee, 2002–2005
WILLIAM DUDLEY
Government: President, Federal Reserve Bank of New York, 2009 to present
Goldman: Partner and managing director; worked at Goldman from 1986 to 2007
STEVEN ELMENDORF
Government: Senior adviser to then–House minority leader Richard Gephardt
Goldman: Runs his own lobbying firm; Goldman is a client
DINA FARRELL
Government: Deputy director, National Economic Council, Obama administration, since January 2009
Goldman: Financial analyst at Goldman, 1987–1989
EDWARD C. FORST
Government: Adviser to Treasury Secretary Henry Paulson in 2008
Goldman: Former global head, investment management division at Goldman, where he worked from 1994 to 2008
RANDALL M. FORT
Government: Assistant secretary of state for intelligence and research, November 2006–January 2009
Goldman: Director of global security, 1996–2006
HENRY H. FOWLER
Government: Secretary of the Treasury, 1965–1968
Goldman: After leaving the Treasury Department, joined Goldman in New York as a partner
STEPHEN FRIEDMAN
Government: Chairman, President’s Foreign Intelligence Advisory Board and of the Intelligence Oversight Board; chairman, Federal Reserve Bank of New York, 2008–2009; former director of Na
tional Economic Council under George W. Bush; economic adviser to Bush, 2002–2004
Goldman: Joined Goldman in 1966; former cochairman; left in 1994; was board member until April 2013
GARY GENSLER
Government: Chairman of the US Commodity Futures Trading Commission since 2009; undersecretary of the Treasury, 1999–2001; assistant secretary of the Treasury, 1997–1999
Goldman: Former co-head of finance worldwide; worked at Goldman from 1979 to 1997
RICHARD GEPHARDT
Government: US Representative, 1977–2005
Goldman: President and CEO, Gephardt Government Affairs (since 2007); represents Goldman interests on issues related to TARP
JUDD GREGG
Government: Three-term New Hampshire senator; ranking Republican on the Appropriations, Banking, Housing and Urban Affairs Committee and on the Health Education Labor and Pensions Committee
Goldman: International adviser
LORD BRIAN GRIFFITHS
Government: Head of the prime minister’s policy unit, 1985–1990
Goldman: International adviser since 1991
THOMAS HEALEY
Government: Assistant Secretary of Treasury for Domestic Finance in Reagan administration
Goldman: Started at Goldman in 1985; founded the Pension Services Group in 1990
JIM HIMES
Government: Congressman from Connecticut (on Committee on Financial Services) since 2009
Goldman: Began working at Goldman in 1995, eventually promoted to vice president
ROBERT D. HORMATS
Government: Under secretary of state for economic, energy and agricultural affairs-designate since July 2009; assistant secretary of state for economic and business affairs, 1981–1982
Goldman: Vice chairman of Goldman Sachs International; worked at Goldman from 1982 to 2009
OTTMAR ISSING
Government: Bundesbank board member and ex-chief economist of the European Central Bank
Goldman: Senior adviser
CHRIS JAVENS
Government: Ex-tax policy adviser to Senator Chuck Grassley (R.-Iowa)
Goldman: Lobbies for Goldman
REUBEN JEFFERY III
Government: Under secretary of state for economic, business, and agricultural affairs, 2007–2009; chairman of the Commodity Futures Trading Commission, 2005–2007
Goldman: Former head of the Goldman Paris office; worked at Goldman from 1983 to 2001
DAN JESTER
Government: Former Treasury adviser
Goldman: Former Goldman vice president and deputy chief financial officer
JAMES JOHNSON
Government: Selected to serve on Obama’s vice presidential section committee but stepped down
Goldman: On board of directors since May 1999
NEEL KASHKARI
Government: Interim head, Treasury’s Office of Financial Stability, October 2008–May 2009; assistant secretary for international economics (confirmed 2008); special assistant to Treasury Secretary Henry Paulson, 2006–2008
Goldman: Vice president, 2002–2006
LORI E. LAUDIEN
Government: Former counsel for the Senate Finance Committee, 1996–1997
Goldman: Lobbyist since 2005
ARTHUR LEVITT
Government: Chairman, SEC, 1993–2001
Goldman: Adviser, June 2009 to present
MARIO MONTI
Government: Prime minister of Italy
Goldman: International adviser, 2005 until his nomination to lead the Italian government; also worked closely with Goldman to reduce the apparent size of Italian government debt
PHILIP MURPHY
Government: US ambassador to Germany since 2009
Goldman: Former partner of Goldman, where he worked from 1983 to 2006
MICHAEL PAESE
Government: Top staffer to House Financial Services Committee Chairman Barney Frank
Goldman: Director of government affairs/lobbyist, 2009
MARK PATTERSON
Government: Treasury Department chief of staff since February 2009
Goldman: Lobbyist, 2003–2008
HENRY “HANK” PAULSON
Government: Secretary of the Treasury, March 2006–January 2009; White House Domestic Council, serving as staff assistant to the president, 1972–1973; staff assistant to the assistant secretary of defense at the Pentagon, 1970–1972
Goldman: Former CEO; worked at Goldman from 1974 to 2006
ROMANO PRODI
Government: Two-time prime minister of Italy
Goldman: From March 1990 to May 1993 and when not in public office, acted as a consultant to Goldman Sachs
RICHARD Y. ROBERTS
Government: Former SEC commissioner, 1990–1995
Goldman: Principal at RR&G LLC; retained by Goldman to lobby on TARP
JOHN F. W. ROGERS
Government: Served as undersecretary of state for management at the US Department of State, 1991–1993
Goldman: Executive vice president since April 2011; chief of staff and secretary to board of directors since November 2001; joined in 1994 in the fixed income division and served in various positions, 1994–2001
ROBERT RUBIN
Government: Treasury secretary, 1995–1999; chairman, National Economic Council, 1993–1995
Goldman: Former co-senior partner at Goldman, where he worked from 1966 to 1992
STEVE SHAFRAN
Government: Adviser to Treasury Secretary Henry Paulson
Goldman: Worked at Goldman from 1993 to 2000
SONAL SHAH
Government: Director, Office of Social Innovation and Civic Participation (April 2009); advisory board member, Obama-Biden Transition Project; variety of positions in the Treasury Department, 1995–2002
Goldman: Vice president, 2004–2007
FARYAR SHIRZAD
Government: Served on the staff of the National Security Council at the White House, March 2003–August 2006; assistant secretary for import administration at US Department of Commerce in the Bush administration
Goldman: Global head of government affairs (lobbyist) since 2006
GENE SPERLING
Government: Director of the National Economic Council in Obama administration
Goldman: Consultant to Goldman in 2008
ROBERT K. STEEL
Government: Under secretary for domestic finance, Treasury, 2006–2008
Goldman: Former vice chairman of Goldman, where he worked from 1976 to 2004
ADAM STORCH
Government: Managing Executive of the SEC’s enforcement division, October 2009 to present
Goldman: Former vice president at Goldman, where he worked from 2004 to 2009
MARTI THOMAS
Government: Assistant secretary in legal affairs and public policy, 2000; deputy assistant secretary for tax and budget, Treasury Department, 1998–1999; executive floor assistant to Richard Gephardt, 1989–1998
Goldman: Joined Goldman as federal legislative affairs leader, 2007–2009
MASSIMO TONONI
Government: Italian deputy Treasury chief, 2006–2008
Goldman: Former partner, 2004–2006
MALCOLM TURNBULL
Government: Member of the Australian House of Representatives since 2004
Goldman: Chairman and managing director, Goldman Sachs Australia, 1997–2001
SIDNEY WEINBERG
Government: Vice-Chair, War Production Board, during World War II
Goldman: Worked at Goldman from 1907 to 1969
JOHN WHITEHEAD
Government: Under secretary of state from 1985 to 1989; former Chairman of the Board of the Federal Reserve of New York
Goldman: Worked at Goldman from 1947 to 1984. Was co-senior partner with John L. Weinberg
KENDRICK WILSON
Government: Adviser to Treasury Secretary Henry Paulson
Goldman: Senior investment banker at Goldman, where he worked from 1998 to 2008
> ROBERT ZOELLICK
Government: President, World Bank, since 2007
Goldman: Vice chairman, Goldman Sachs International; managing director and chairman, Board of International Advisors, 2006–2007
A reminder: I am not judging the involvement of these individuals—good or bad. This is merely to present a selected group as data.1 A spokesman of Goldman stated: “We’re proud of our alumni, but frankly, when they work in the public sector, their presence is more of a negative than a positive for us in terms of winning business. There is no mileage for them in giving Goldman Sachs the corporate equivalent of most-favored-nation status.”2
Appendix D
Value of Partners’ Shares at IPO
A list of Goldman partners at the time of the IPO is shown in table D-1. The names, percentages of shares, shares outstanding, values at IPO, and values at close are all provided. This analysis is based on reported percentages from the New York Times.
TABLE D-1
Percentages, shares, and value of partners’ shares at the IPO and first closing prices
Name Percentage Implied shares outstanding Value at IPO price ($53) First closing price ($70.38)
Henry M. Paulson Jr. 1.100% 2,915,210 $154,506,120 $205,172,466
Jon S. Corzine 1.100% 2,915,210 154,506,120 205,172,466
Robert J. Hurst 1.100% 2,915,210 154,506,120 205,172,466
John A. Thain 1.050% 2,782,700 147,483,114 195,846,445
John L. Thornton 1.050% 2,782,700 147,483,114 195,846,445
Daniel M. Neidich 0.900% 2,385,172 126,414,098 167,868,381
John P. McNulty 0.900% 2,385,172 126,414,098 167,868,381
Lloyd C. Blankfein 0.900% 2,385,172 126,414,098 167,868,381
Michael P. Mortara 0.900% 2,385,172 126,414,098 167,868,381
Richard A. Friedman 0.900% 2,385,172 126,414,098 167,868,381
Robert K. Steel 0.900% 2,385,172 126,414,098 167,868,381
Jacob D. Goldfield 0.825% 2,186,407 115,879,590 153,879,349
Jon Winkelried 0.825% 2,186,407 115,879,590 153,879,349
Mark Schwartz 0.825% 2,186,407 115,879,590 153,879,349
Patrick J. Ward 0.825% 2,186,407 115,879,590 153,879,349
Peter A. Weinberg 0.825% 2,186,407 115,879,590 153,879,349
Philip D. Murphy 0.825% 2,186,407 115,879,590 153,879,349
What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences Page 28
