Goldman Sachs Group Inc. (GS) Chief Financial Officer David A. Viniar, who guided the firm through its 1999 initial public offering and the 2008 financial crisis, will end his 32-year career as an employee in January.
Viniar, whose 12 years in the role make him the longest- serving CFO on Wall Street, will be succeeded by Harvey M. Schwartz, 48, one of three global co-heads from the sales and trading division, the New York-based bank said in a statement yesterday. Goldman Sachs will add Viniar, 57, as well as some independent directors to the 10-member board, the firm said.
Goldman Sachs, the most profitable securities firm in Wall Street history before converting to a bank in 2008, has climbed 33 percent this year in New York trading, and the U.S. Justice Department and Securities and Exchange Commission have dropped probes into the company. Viniar told an analyst last year he wouldn’t leave until a sense of calm was restored.
“We’ve always worried what would happen when David Viniar left,” said Jim Rothenberg, who runs Los Angeles-based Capital Group Cos., a Goldman Sachs client and its second-biggest shareholder, after the bank’s own employees. “Every change gets people somewhat nervous, but I don’t know that there’s a better individual there to take over this function.”
Viniar, during a conference call with investors after his retirement was announced, said he’s comfortable leaving now because the firm is in “very good financial shape.”
“We are performing as well as we could given the operating environment,” he said.
Viniar served under Chairman and Chief Executive Officer Lloyd C. Blankfein, 57, and his predecessor, Henry M. Paulson, who left in June 2006 to become U.S. Treasury Secretary under then-President George W. Bush.
Under both executives, Viniar served as the most public face of the firm, speaking to analysts and investors about quarterly results and at conferences. Meredith Whitney, the analyst and founder of Meredith Whitney Advisory Group LLC, said in a note to investors yesterday that Viniar “set the gold standard for CFOs across the industry.”
The move may indicate that Goldman Sachs management feels it’s past the worst of the financial crisis and the legal scrutiny that followed, including a $550 million settlement with the SEC over claims that the firm misled investors in a mortgage-linked security, said Benjamin B. Wallace, an analyst at Westborough, Massachusetts-based Grimes & Co.
“I’d assume it’s been a rather stressful couple of years there,” said Wallace, whose firm doesn’t own Goldman Sachs stock. “There will obviously be some questions about when Lloyd is going to step down as well.”
Blankfein is scheduled to speak today at an event hosted by The Canadian Club of Toronto.
Viniar’s role has been broader than at some other companies, leading people familiar with the matter to say last year that they weren’t sure one executive could assume all of his duties when he left.
Schwartz said he will follow Viniar in taking on responsibility for the entire administrative side of the firm -- known as operations, technology and finance or by its nickname, “The Federation” -- because regulatory changes make it important to coordinate all those areas.
“I don’t see any material changes to the way we want to operate the business,” Schwartz said on yesterday’s conference call. “He’s a pretty tough act to follow.”
Viniar said there aren’t any changes expected in his team, which includes Treasurer Elizabeth “Liz” Beshel Robinson, who joined the company in 1990 and was trained by him to handle the firm’s financing and liquidity. Robinson and Sarah Smith, Goldman Sachs’s controller and chief accounting officer, are among deputies that were viewed as potential successors to Viniar, people familiar with the matter said last year.
“I’ll be relying on the staff extensively,” Schwartz said. “I’ll be relying on them as much as David has.”
Schwartz graduated from Rutgers University in 1987 and earned a master’s degree in business administration from Columbia University in 1996. He joined Goldman Sachs’s commodities sales and trading unit J. Aron in 1997 and spent most of his career in sales, except for two years in the financing group that advises corporate clients on debt and equity financing.
His start at J. Aron is similar to that of Blankfein and Chief Operating Officer Gary D. Cohn, 52, who both began their Goldman Sachs careers in that business. By contrast, Viniar joined the investment-banking department in 1980 and was promoted to CFO after serving as deputy chief financial officer under then-CFO John A. Thain. Before that, Viniar oversaw the firm’s treasury and controllers.
Schwartz became co-head of the securities division in February 2008, giving him oversight of the company’s biggest business by revenue. Isabelle Ealet, 49, the French-born former commodities chief who helps run securities from London, and Pablo J. Salame, 46, the New York-based Ecuadoran citizen who has experience overseeing equities, credit and emerging markets, will be left in charge of the business after Schwartz’s move.
In his new post, Schwartz will receive a base salary of $1.85 million as well as a bonus, Goldman Sachs said in a filing today.
‘Lot of Credit’
Viniar, who was awarded $11.85 million in salary and bonuses for 2011, held about 1.83 million shares of Goldman Sachs stock as of March 26, according to the firm’s annual proxy filing. His holding is valued at more than $219 million, based on yesterday’s closing price of $119.88 a share.
“I will continue to be a large stockholder for many years to come,” Viniar said in response to an analyst’s question about whether he planned to sell any of his shares when he leaves. “I’m confident that Harvey as a CFO will continue to get the stock price higher.”
Viniar will get “a lot of credit” for managing the firm’s risk through the financial crisis and helping the company emerge in a strong position relative to peers, Roger Freeman, an analyst at Barclays Plc’s investment-banking unit in New York, said in an interview.
“It’s obviously not fair to credit one person for that but everything they’ve done, he’s been on top of,” Freeman said.