Thain Is an Insider and a Freethinker

For a Wall Street technocrat with a reputation for keeping a low profile, John A. Thain has a renegade streak.

The Goldman Sachs Group Inc. president, named chief executive of the New York Stock Exchange on Thursday, startled colleagues last month by suggesting that some NYSE trades should be handled electronically rather than by human traders working for specialist firms. The specialist firms, the exchange’s iconic floor traders, include Goldman’s own Spear, Leeds & Kellogg.

After making the suggestion during an investors conference, Thain clarified that he was expressing his own opinion, not that of Goldman Sachs.

Thain has shown freethinking tendencies in the political arena as well, supporting the 2000 presidential candidacy of campaign-finance reformer Sen. John McCain (R-Ariz.). This year, Thain crossed the aisle and chipped in $2,000 to Sen. Evan Bayh, the Indiana Democrat who sponsored a bill with McCain designed to increase the number of volunteers for national public service.

“Public service” was Thain’s explanation Thursday for why he would leave Goldman Sachs after 24 years to accept the invitation of John S. Reed, former Citigroup Inc. co-chairman, to head the NYSE operations team. The pay will be $4 million a year, down sharply from his compensation at Goldman, where he earned $6.3 million in salary and bonus last year and $10.5 million in 2001.

Reed is serving as the exchange’s chairman in a cleanup role. The former chairman, Richard Grasso, was forced out after the disclosure that his pay package totaled $187.5 million.

Regulators are investigating whether exchange specialists improperly made money at the expense of clients. Spear Leeds is one of the firms under investigation.

Born in Illinois, the 48-year-old Thain has lived for decades in the comfortable Westchester County suburbs north of New York City.

Fit and a ski buff, he also owns a home in Vail, Colo.

A nearby resident on Purchase Street in Rye, N.Y., William Wolfson, described Thain as a “very private” man, not well-known to his neighbors.

Thain’s wife, Carmen, is the president of the board of trustees at Rye Country Day School, a college-preparatory academy she graduated from in 1975, according to the school’s literature. The couple have four children.

In an internal memo, Goldman said Thain “distinguished himself through his character, rigorous intellect and devotion to the firm’s culture.”

It praised his work building the firm’s mortgage-securities business in the 1980s, helping manage it through a financial crisis in 1994. And it cited his “instrumental” work on the firm’s transition from private partnership to public firm.

Some insiders referred to the former Goldman chief financial officer as “Thain the Humane,” said Roy Smith, a New York University professor and former Goldman partner.

Thain’s credentials help show why: He spearheaded a cultural diversity campaign for Goldman and is on the board of such organizations as the National Urban League and Howard University.

With an undergraduate degree in electrical engineering from the Massachusetts Institute of Technology to go with an MBA from Harvard University, Thain has been described as one of Wall Street’s “numbers men,” technically oriented cost-cutters whose influence grew during the long bear market in the early part of this decade.

Indeed, when he was chosen to be Goldman’s co-chief operating officer in 1999 along with John Thornton, the idea was to combine Thornton’s customer-relations flair with Thain’s insider experience as CFO.

Reed serves on MIT’s board with Thain. Smith said he believed Reed was attracted to Thain’s quiet focus and ability to ask good questions.

Although the public may see the NYSE as functioning like a public company -- certainly something suggested by Grasso’s enormous earnings -- it is in fact more of a “public trust,” Smith said, adding that Thain no doubt perceives it as such.

“The older you get and the richer you get, the more you realize that there’s more to life than getting up at 6:30 in the morning and heading to work,” Smith said. “I’m sure he believes this is a way to pay back some of his own extraordinarily good fortune.”

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The new CEO

John A. Thain was named chief executive of the New York Stock Exchange on Thursday. He’ll start Jan. 15.

Name: John A. Thain

Age: 48

Experience at Goldman Sachs Group: President and chief operating officer; co-chief operating officer, 1999-2003; director since 1998; chief financial officer and head of operations, technology and finance, 1994-99; co-chief executive for European operations, 1995-97

Education: Bachelor of science from Massachusetts Institute of Technology, 1977; MBA from Harvard University, 1979

Personal: Married with four children

Source: NYSE