Last November, we scrutinized the compensation of one of America’s best-paid in-house lawyers: Gregory Palm, general counsel of Goldman Sachs. There was some nit-picking from readers about the precise size of his (pay) package, reflected in the various updates appended to the post, but there was unanimity on the main point: serving as Goldman’s top lawyer is a path to riches.
Over the weekend, the New York Times published a long, interesting, behind-the-scenes look at the negotiations between Goldman and the SEC that culminated in the bank’s $550 million settlement — negotiations in which Greg Palm played a leading role. For some good commentary on Louise Story’s article, check out Larry Ribstein (who sees the case as a strike suit that just happened to be brought by the SEC).
What we found most intriguing about the NYT piece — which weighed in at a hefty 3,200 words, as noted by the WSJ Law Blog — was the delicious dish about Gregory Palm’s pay….
Greg Palm was a partner in Goldman before it went public, so he made a killing when GS had its IPO. But things got rough for him in late 2008, according to the NYT:
Like many Goldman partners, Mr. Palm also poured his money into Goldman’s own investment funds, hoping for outsize returns. That came back to bite him in the fall of 2008 when the financial crisis hit. As Goldman neared the brink, Mr. Palm was caught in a financial squeeze and ran short on cash. Goldman paid him $38.3 million to buy out some of his stakes in the funds. The stakes were otherwise illiquid, but Goldman purchased them from him so he would not have to sell Goldman stock, which might have alarmed investors.
So Greg Palm knows a thing or two about financial bailouts. How did a Goldman god find himself in such a predicament? It’s not clear:
Several people who know Mr. Palm say they were shocked that he was short on cash because he was not a lavish spender and because Goldman has paid him lavishly. Goldman has given him stock and options worth $59 million since 2002, according to Equilar, an executive compensation research firm.
Equilar’s math is consistent with ours. In our prior post, we came up with a total of about $60 million for the 2003-2009 period.
Appearing before a Senate committee in November 2008, just after Goldman received a $10 billion taxpayer bailout, Mr. Palm appeared relaxed and friendly, telling lawmakers that Goldman’s compensation would be down that year. “We get it,” he said emphatically.
It depends on what the meaning of “it” is. Does “it” mean millions and millions in yearly comp?
Goldman continued to pay Mr. Palm richly. In 2008, he didn’t get a cash bonus but he did receive a substantial package of options and stock when Goldman’s shares were trading near their lows; less than a year later the package was worth nearly $12 million, according to Equilar.
Delicious. Matt Taibbi of Rolling Stone famously described Goldman as “a great vampire squid wrapped around the face of humanity.” Can we turn that squid into calamari?
P.S. Greg Palm isn’t the only lawyer mentioned in the Times article who has done well for himself. One of the other major players in the SEC-Goldman negotiations was Lorin Reisner, who was a partner at Debevoise & Plimpton for about 13 years before joining the SEC in 2009. The NYT piece notes that “Mr. Reisner and his wife, Mimi, often hosted parties at homes on Park Avenue and in Water Mill, N.Y.” — two ultra-tony locales. (Water Mill, located in the Hamptons, is popular with Biglaw partners. A partner I once worked with at Wachtell has a beautiful house there, with a swimming pool and incredible gardens.)
UPDATE: Elie has been to Reisner’s Park Avenue residence, for a summer firm event, and describes it as “palatial and fabulous.” (Elie describes Reisner, with whom he worked, as “a really good guy — demanding but fair-minded, and also charismatic.”)
The Men Who Ended Goldman’s War [New York Times]
The SEC’s Strike Suit [Truth on the Market]
More on the Goldman/SEC Deal: On Lawyers, Votes & Strategy [WSJ Law Blog]