Top Goldman Sachs executive Jon Winkelried, will be barred from selling most of his shares in the bank when he steps down as one of its presidents at the end of this month because of a provision in the 2008 deal to sell a stake to Warren Buffett.
Only days after the collapse of Lehman Brothers in September, Mr Buffett’s company, Berkshire Hathaway, agreed to invest $5bn in Goldman in return for 50,000 preferred shares, granting it a 10 per cent annual dividend, and warrants to purchase $5bn in common stock at $115 per share.
According to a provision of the deal, Goldman’s top four executives are forbidden from selling more than 10 per cent of their stakes in the bank until October 2011, or such time as Berkshire’s preferred stock is bought back by Goldman. The agreement with Mr Buffett was noteworthy because Mr Winkelried – who remains co-chief operating officer and president until he steps down – will still be bound by the contract after he leaves Goldman. The other Goldman executives bound by the contract are Lloyd Blankfein, chief executive; Gary Cohn, co-chief operating officer and president; and David Viniar, chief financial officer.
Mr Buffett agreed a similar arrangement with General Electric in October when he purchased $3bn of 10 per cent preferred stock. Jeff Immelt, GE chief executive, and Keith Sherin, chief financial officer, agreed not to dispose of more than 10 per cent of their holdings before the preferred stock was redeemed, or October 2011.
Mr Winkelried, 49, has been one of the best paid executives on Wall Street, earning $53m in 2006 and $67.5m in 2007. Last year, he and other members of Goldman’s top management team accepted no bonuses. Given the shifts in the financial services industry, it is unlikely that compensation for leading banking executives will soon return to the levels of 2006 and 2007.
Mr Winkelried has not commented on his reasons for leaving Goldman. An avid horseman, he owns a ranch in Colorado. In 1999, he bought an oceanfront mansion on the island of Nantucket. He put the property up for sale for $55m in October, but reduced the asking price to $38.5m this year
According to a Goldman partner who knows him, Mr Winkelried had considered stepping down last summer, before Mr Buffett invested in the bank. But when the markets became turbulent, Mr Winkelried felt an obligation to remain.
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