Salomon Bros. Adds Posts to Top Echelon
Salomon Bros., Wall Street’s largest securities firm, filled in some spaces at the top of its organization chart Wednesday with the addition of a president, two vice chairmen, and an 18-member board of directors.
Thomas W. Strauss, 44, the head of Salomon’s government bond-trading, foreign exchange and international operations, was named to the newly created post of president. Lewis S. Ranieri, 39, head of the mortgage securities and real estate departments, and William J. Voute, 48, head of corporate bond trading, were appointed to new positions as vice chairmen.
Strauss will also succeed economist Henry Kaufman as vice chairman of Salomon Inc., the securities firm’s parent holding company, a step that establishes him as a clear second in command at the firm after Chairman and Chief Executive John H. Gutfreund.
Analysts said the purpose of the changes was to clarify the chain of command behind Gutfreund and to provide a more viable management structure for the fast-growing firm. For years a relatively small bond-trading operation, Salomon has exploded under Gutfreund’s leadership and has more than doubled its staff size, to 5,250, in the past five years.
Kaufman, the interest-rate prognosticator who is perhaps Salomon’s best-known figure, will also give up his post as a director of Salomon Inc., although he will remain a member of the executive committee and of the board of directors of Salomon Bros.
Kaufman is known as one of the few people whose pronouncements could have a strong effect on the stock market. In August, 1982, for example, one of his interest-rate forecasts was held by some to be responsible for pushing the Dow Jones industrial average up 38.81 points.
In an interview, Strauss said the vice chairman and director posts had not been taken from Kaufman, whose $2-million salary is said by some to make him the best-paid economist in the country. “It was 100% his idea,” Strauss said. “He wanted to be freed of administrative duties to do what he likes best.”
Kaufman was said to be traveling in Europe and unavailable for comment.
Strauss said the management changes were made “to find a better way to run a place that has really gotten enormous, and particularly to take some of the burden off” Gutfreund. Asked about speculation that the appointment makes him Gutfreund’s heir apparent, he said it is “not at all clear” that he will succeed to the top post, adding that he expects the 57-year-old Gutfreund to remain in his job for many years.
Like Gutfreund, Strauss has gained a reputation as an executive who expects consistent performance from subordinates. “He’s a tough guy,” one investment banker said.
The new board of directors is to direct day-to-day operations of the company, while the existing executive committee will be charged with strategic planning, officials of the firm said.
Despite Gutfreund’s reputation as an able administrator, some on Wall Street “have been a little concerned that he needed some heir apparents, and some more hierarchical chain of command,” said Michael Blumstein, an analyst who follows the securities industry for First Boston Corp.
He said Strauss, Ranieri and Voute, who have been most frequently mentioned as possible successors to Gutfreund, were not surprising choices for the three new posts.
As of Dec. 31, 1985, the Salomon Bros. broker-dealership had a capital base of $2.23 billion, compared to $2.22 billion for second-place Merrill Lynch’s broker-dealer operations.
