Goldman Sachs’s C.E.O. Whisperer Takes a Step Back

Goldman makes a big executive change

The man who has been perhaps the most influential executive inside Goldman Sachs for more than a generation has begun to hand over some of his responsibilities. John Rogers, who over his quarter-century at the Wall Street bank has been known as a board and C.E.O. whisperer, will give his role as chief of staff to Russell Horwitz, his onetime deputy, Andrew and DealBook’s Lauren Hirsch are first to report.

Rogers, 67, has no plans to leave the firm anytime soon and will retain other positions at Goldman, including executive vice president, secretary to the board, member of its management committee and leader of its philanthropic efforts. But the move marks a passing of the torch in one of Goldman’s most crucial roles, as David Solomon, the firm’s C.E.O., conducts an overhaul of the bank and a series of prominent executives have left.

Rogers has an outsized influence and an intentionally understated public profile. He was a fast-rising star in Washington during the Reagan and George H.W. Bush administrations, where he learned what The Times described as “the fine arts of managing vast bureaucracies and even vaster egos.”

Rogers joined Goldman in 1994 and quickly became chief of staff to four leaders: Jon Corzine, who hired him, Hank Paulson, Lloyd Blankfein and Solomon. He also wielded considerable influence outside the firm, helping Paulson become Treasury secretary in 2006.

His replacement is also well known at Goldman. Horwitz joined Goldman in the 2000s as a speechwriter for Paulson, eventually making partner in 2012 and becoming chief of staff to Blankfein. (He accompanied Blankfein to his now-famous grilling in the Senate in 2010.) He gained the nickname “Mr. Fix-It” by helping Goldman navigate crises like the fallout from the 2008 financial crisis and the 1MDB scandal. In 2020, he left the bank; the next year, he joined the investment firm Citadel as its chief global affairs officer.

In returning to Goldman, where he will also be a partner and a member of the management committee, Horwitz will oversee the firm’s corporate communications, lobbying and public engagement. In an internal memo, Solomon wrote that Horwitz’s long experience at Goldman would “position him well to take on these significant responsibilities, and I look forward to collaborating with him in the years ahead.”

The transition is sure to raise eyebrows inside and outside of Goldman. Horwitz is known to be close to Blankfein, who has reportedly grumbled about Solomon. Over the past year, Solomon has been in the hot seat as the firm has struggled with a bad bet on consumer finance and disappointing performance in its core deal-making and trading businesses amid a broader M.&A. slump.

HERE’S WHAT’S HAPPENING

Chinese trade plummets. The country said exports in July fell 14.5 percent compared to a year ago and imports were down 12.4 percent, far below analyst forecasts. It’s the latest sign of China’s sputtering post-pandemic recovery, which has been slowed by weak consumer spending and high youth unemployment. Chinese authorities have reportedly told the country’s economists to be less negative as growth stalls.

SoftBank posts another loss despite improvement at its Vision Fund. The Japanese tech investor lost $3.3 billion in its most recent quarter, disappointing analysts who had expected the company to return to profitability after being in the red for over a year. Paper losses on its holdings of Alibaba and T-Mobile were to blame, though they were partially offset by the Vision Fund, which reported a gain amid rising tech stock prices.

F.T.C. leaders are set to meet with Amazon ahead of a potential legal battle. The gathering, scheduled for next week, signals that the agency may be ready to file an expansive antitrust lawsuit against the e-commerce giant, The Times reports. The talks are meant to give Amazon a chance to make its case; such gatherings are often known as “last rites” meetings, named after the prayers some Christians receive on their deathbed.

Tesla’s C.F.O. steps down unexpectedly. Zach Kirkhorn, who served in the role for four years, was often seen as a potential successor to Elon Musk at the company. A former McKinsey consultant, Kirkhorn helped make Tesla into the world’s most valuable automaker. He will be replaced by Vaibhav Taneja, the chief accounting officer.

S&P Global stops scoring companies on E.S.G. criteria. The ratings agency said it would issue only written descriptions of businesses’ exposure to environmental, social and corporate governance risks, rather than giving out numerical assessments. The move comes months after several Republican-led states began an investigation into S&P’s use of E.S.G. ratings, as part of a broader pushback against companies’ adoption of environmentally focused policies.

Private equity does publishing

The success of KKR’s $1.6 billion acquisition of the book publisher Simon & Schuster from Paramount will partly depend on the private equity firm’s ability to retain talent. That may be tricky, given that some in the publishing industry were grumbling ahead of the deal’s announcement that the firm didn’t understand the economics or culture of their sector.

But KKR is betting that giving employees equity in the company will help persuade the doubters, deploying a strategy it has used for years.

All Simon & Schuster employees will receive an ownership stake in the company. KKR used this model with RBmedia, an audiobooks company it acquired in 2018. It agreed to sell the company last month and said it would give staff members a cash payout worth as much as double their annual salary.

KKR hopes that will help Simon & Schuster lure talent in an industry not known for its pay. “It is understood you’re going to be able to work in your chosen field of publishing because you love books, but you’re going to have to make big sacrifices in terms of compensation,” Pete Stavros, the firm’s co-head of global private equity, told DealBook. He added that the deal would give employees a chance at getting “a life-impacting amount of wealth.”

But that will only work if the deal is successful. As with any leveraged buyout, Simon & Schuster will have to manage the debt used to finance the purchase. The publishing industry as a whole has been broadly flat, although Simon & Schuster, whose authors include the best-selling writers Stephen King and Colleen Hoover, has been reliably profitable.

Richard Sarnoff, a longtime publishing executive and an adviser to KKR, told DealBook the firm saw an opportunity to invest in the company after Paramount decided it didn’t fit in with its core businesses. And he said he hoped the feeling of ownership that comes with the equity program would help make the deal a success. “That kind of mentality against a business that has been traditionally seen as not the most dynamic of the media businesses is really something that we are excited to explore,” he said.

“We believe that a structured hybrid approach — meaning employees that live near an office need to be on site two days a week to interact with their teams — is most effective for Zoom.”

— A spokesperson for Zoom, the videoconferencing company. Despite being the business that helped make remote work possible for millions during the pandemic, Zoom is making its own employees come back to the office.

PayPal makes a stablecoin play

PayPal said yesterday that it would move further into crypto by creating a dollar-backed token, in partnership with the stablecoin issuer Paxos.

The move by a major financial company into the world of stablecoins, which are pegged to the value of stalwart assets like the dollar, could help fulfill proponents’ dreams of making such tokens mainstream. “This actually takes the concept and makes it real,” Charles Cascarillo, C.E.O. of Paxos, told DealBook.

PayPal is hoping to succeed where others have failed. In 2019, Facebook sought to create its own stablecoin, eventually known as Diem, but met resistance from lawmakers concerned about the tech giant expanding into finance. And the algorithmic stablecoin Terra, which was meant to maintain its value through a mathematical formula instead of dollar reserves, crashed last year, in a black eye for the industry.

By contrast, PayPal’s announcement won praise from Representative Patrick McHenry of North Carolina, the Republican chairman of the House Financial Services Committee, who called it “a clear signal that stablecoins — if issued under a clear regulatory framework — hold promise as a pillar of our 21st century payments system.” Jeremy Allaire, the co-founder and C.E.O. of the stablecoin issuer Circle, told DealBook that the move showed the tokens “are here to stay.”

But questions remain about how to oversee stablecoins. McHenry’s committee recently voted to advance legislation about stablecoin regulation, but Democrats have called the bill “deeply problematic.” While policymakers agree that issuers must have ample liquidity reserves and other consumer protections, they disagree on issues including reserve levels and the role of state regulators.

Paxos, which won approval from New York State to issue a stablecoin in 2018, said that the PayPal USD token would be backed one-to-one by dollars and short-term Treasury bills that will be held in a trust, regulated by the state’s Department of Financial Services. That arrangement would be allowed under McHenry’s bill, though the role of state regulators has become a sticking point in talks with the Biden administration, a senior Republican staffer on the committee told DealBook.

THE SPEED READ

Deals

• The telecom mogul Charlie Ergen struck a deal to merge Dish, his pay-TV and wireless company, and EchoStar, his satellite communications business. (WSJ)

• Neuralink, the brain-implant start-up founded by Elon Musk, has raised $280 million in a round led by Peter Thiel’s Founders Fund. (Bloomberg)

• Campbell Soup agreed to buy Sovos Brands, the maker of Rao’s pasta sauces, for $2.7 billion to expand in the premium sauce market. (CNN)

• RedBird IMI, the investment firm led by the former CNN chief Jeff Zucker, has struck its first deal: funding the creation of a nonfiction content studio. (Hollywood Reporter)

Policy

• A Moscow court has frozen Goldman Sachs’s holdings in several Russian companies following a lawsuit by a state-owned bank. Meanwhile, critics say European countries aren’t doing enough to crack down on wealthy Russians tied to Vladimir Putin. (FT, WaPo)

• House Democrats urged the S.E.C. to quickly finalize climate disclosure rules. (P&I)

• Italy hit banks with a 40 percent windfall tax, sending shares in domestic lenders down sharply. (CNBC)

Best of the rest

• Stability AI appeared to be a breakout star in a new class of A.I.-focused start-ups — but it has lost a string of top executives and faces a number of controversies. (Bloomberg)

• On-set visual-effects producers at Marvel voted to unionize, amid criticism of the studio’s treatment of those workers. (Vulture)

We’d like your feedback! Please email thoughts and suggestions to [email protected].