Goldman committee meets to decide on market float
Monday 15 June 1998
The bank's executive committee met last night to assess the results of what was being billed as merely a "survey" of partners views and will make a formal statement on their decision at 7.30am New York time today.
A "news blackout" was imposed on all those in the know. Partners were warned that those caught briefing the press would lose their jobs and therefore the chance to participate in one of the largest ever free share hands-out in history.
Even though a majority of the 190 partners were believed to have voted in favour of a float, Jon Corzine, co-chairman, has said he will only proceed if support is "overwhelming".
Several partners of senior standing including two members of the executive committee have argued strongly against flotation saying it will change the bank's culture and therefore might undermine its success.
The ballot was taken at a two-day meeting of partners, many of whom had flown in from London, at the exclusive IBM Palisades Executive Conference Center, nestled in forests about 40 miles northwest of New York and two miles to the west of the Hudson River.
Sources said each partner was asked to fill in a lengthy questionnaire touching on a range of subjects about the future of the partnership. All that really mattered, however, was how many indicated their support for a sale of shares. The meeting broke up at about 3pm on Saturday.
While speculation that the vote had been in favour of a public offering was almost instant, officials insisted nothing would be clear until after a meeting of the firm's executive committee, made up only of the co-chairmen Jon Corzine and Henry Paulson, and four other senior partners. That meeting was set for late yesterday afternoon at Goldman Sach's headquarters on Broad Street in Lower Manhattan.
While many continued to believe a public offering remained the most likely option, some sources cautioned that the executive committee could refer the issue for further consideration by another, special committee before any final decision is taken for or against.
The extraordinary measures being taken by Goldman Sachs to keep the process secret was manifested by the elaborate security measures taken at the IBM Center.
While partners attended meetings in the Watson Room, named after the founding father of IBM, a small group of British reporters found themselves unable to penetrate even the main gates to the facility, which is usually open to the public.
Reporters, doused by heavy rains, were left only to ponder the combined values of the luxury cars, from BMW's, Mercedes and one $140,000 (pounds 90,000) Ferrari, parked just inside the gates, belonging, presumably, to the partners.
Those who did not bring their own cars were whisked away at 3pm by a veritable fleet of black Lincoln Town limousines sent the 40 miles from Manhattan.
No details of the flotation have yet been decided, but if the firm does decide to push ahead, only 15 to 20 per cent of the firm's capital will be made immediately available to the public. Partners receiving shares in the converted company will be locked in for varying periods of time, all of them long term.
Partners' interests in the company are also likely to be "capped" at a maximum interest of up to $200m worth of stock each. Any surplus in capital would then be available for redistribution to other employees, including the so called "marzipan layer" of key managing directors just below partnership level.
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