$60M Pot of Goldman

Date: Monday, March 30, 2009
Author: Mark DeCambre, New York Post

A pair of Goldman Sachs partners is scoring their own personal gold-plated bailout amid a souring stock market.

Outgoing Co-President Jon Winkelried and Gregory Palm, the bank's general counsel, are pocketing a combined $60 million as a result of having sold stakes in the firm's hedge funds and private-equity funds back to Goldman.

Winkelried, who is expected to retire from Goldman at the end of this month, is bagging $19.7 million from Goldman, while Palm is receiving $38.3 million, according to public filings released late yesterday by the Securities and Exchange Commission.

The officials are among Goldman's largest individual investors. However, over the past several months they have found themselves in a financial vise as Goldman's private-equity and hedge-fund investments tanked along with the firm's stock.

Many Goldman hotshots bankrolled their million-dollar lifestyles by leveraging future bonuses and stock. However, as Goldman's stock tanked last year amid the financial crisis, many partners found themselves underwater on loans they got using Goldman shares as collateral.

That led some partners to implore Goldman to extend loans in order to keep them out of the poor house, as sources said many claimed to be on the verge of becoming destitute. However, Winkelried and Palm weren't eligible for direct loans as a result of their being high-ranking executives within the firm.

Palm, who has worked at Goldman since 1992, boasts a cushy Park Avenue pad and a house in Summit, NJ.

Meanwhile, Winkelried is one of Goldman's biggest earners, making $57.4 million in 2007. He's had stints running leveraged finance, fixed income and global investments at the firm since becoming a partner 20 years ago.

He owns a stable of horses at his ranch in Meeker, Colo., an estate in Short Hills, NJ, and one in Nantucket, Mass., that's currently up for sale.

The economic crisis in September came to a head for some of Goldman's elite after Lehman Brothers filed for bankruptcy and American International Group accepted the first in a succession of bailouts totaling $180 billion.

Wall Street's implosion sent Goldman shares tumbling to all-time lows and forced even hallowed firms like Goldman to the brink. The shares have since rebounded and closed yesterday at $108.08, down $3.91.

According to Goldman's SEC filing, the officials' investments were "purchased at an amount equal to the capital contributions made by the executive officer," or in the case of hedge-fund and private-equity investments, "based on the estimated net asset value of the funds' investment portfolio," or "at a discount" to the net asset value of the vehicle.

Some 200 Goldman partners are expected to obtain similar arrangements, according to a source. That's an amount equal to about 1 percent of those executives eligible for the Goldman loans. mark.decambre@nypost.com