Jon S. Corzine knows he has a very tough act to follow. On Sept. 13, in an announcement that stunned Wall Street, Stephen Friedman said he would retire at the end of November as chairman of Goldman, Sachs & Co.'s management committee--in effect chief executive officer--and that Corzine would take over the position. Friedman says he is stepping down because he is burned out by the job's intense demands. A driven, intellectual investment banker, he led the private partnership during the most prosperous era in its 125-year history. "I'd be crazy if I wasn't a bit apprehensive," admits Corzine.
But Corzine has two main strengths that could make him the right choice to run what many consider the best-managed, most deeply staffed, and most profitable firm on Wall Street: knowledge of the bond markets and an immensely likable personality. "Jon can talk to corporate clients as well as run a trading operation. That's an enormously useful combination of skills at Goldman Sachs today," says Mikael Salovaara, a former Goldman Sachs partner who is now at Blackstone Group.
Corzine even gets kudos from competitors such as Lehman Brothers Inc. Chief Executive Richard S. Fuld Jr., who worked with Corzine on a Treasury Dept. committee that meets regularly with officials to discuss Treasury markets. "He knows how to bring together groups with different interests," says Fuld. "He's a consensus-builder."
The 47-year-old Corzine speaks as if he will share the job, even though he will clearly be in charge. Henry M. Paulson Jr., 48, will become vice-chairman and chief operating officer. "We intend to work as a true partnership. This is not a one-person job," says Corzine in a joint interview with Paulson, who seems comfortable playing a supporting role.
The two men share a lot and complement each other. Both grew up in Illinois, Corzine on a farm in Taylorville and Paulson in Barrington, where he still lives on the 10 acres he bought next to his parents and commutes to New York. Corzine lives in New Jersey, with another home on eastern Long Island. Both are ex-college jocks: Corzine played basketball and Paulson played football. As for differences, Corzine is a Democrat and Paulson a Republican who worked for John Ehrlichman in the Nixon White House. And the bearded Corzine comes across as a favorite cousin, while Paulson is more reserved. "Stylistically, we're very different. He's a big, cuddly teddy bear. I can't get people to look at me like that," says Paulson.
FULL DECK. Most important, the two men's backgrounds mesh well. Corzine started out as a bond trader and helped build Goldman's dominant position in the global bond markets. He also has been the firm's primary risk manager and co-chief financial officer. Paulson worked in investment banking. Clients have included Sears, Sara Lee, and Motorola. More recently, he and Friedman managed $2 billion af customer and firm investments in real estate, Asian companies, and minority positions in U.S. companies.
Corzine and Paulson will have their hands full. Goldman, which prides itself on teamwork and collegiality, is under pressure. It is in the midst of the excruciating task of choosing about 40 partners from an unusually large group. And after pretax profits of $2.3 billion in 1993, it earned just $446 million from December to May because of some large losses in markets that Corzine supervised. The problem: not calling the market downturn. "We didn't do it very well. I blame it on myself. We were not quick enough to recognize that turn," says Corzine.
Still, Corzine's longer-term record of generating a large chunk of the firm's profits most likely got him the job. But in trying to match Friedman's record, he and Paulson face what they feel is a bleak market environment. Friedman thinks they're up to the job. "They will derive the energy in large part because they have an agenda they want to accomplish and they want to prove they can do it," says Friedman. With any luck, Corzine and Paulson will.