Goldman Executives Restrained From Stock Sales in Buffett Deal

By Christine Harper

Oct. 3 (Bloomberg) -- Goldman Sachs Group Inc.'s top four executives agreed to hold on to 90 percent of the stock they own in the company as part of Goldman's agreement to raise money from Warren Buffett's Berkshire Hathaway Inc.

Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and Co-Presidents Gary Cohn and Jon Winkelried are named in the ``material definitive agreement'' disclosed yesterday by New York-based Goldman in a regulatory filing.

The accord prevents the executives, their families and their estates from selling more than 10 percent of the common stock they own until Oct. 1, 2011, or until Berkshire redeems its $5 billion in preferred stock, whichever comes soonest. Blankfein last month turned to Buffett, the second-richest American and a cult figure in the investing world, to shore up the investment bank's capital base and restore market confidence after Goldman's stock tumbled and its borrowing costs spiked.

``The bet he's making is not just on the horse but on the jockeys,'' said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which manages $1.8 billion including Goldman shares. ``That's the kind of commitment that is really being sought after in a lot of efforts to protect investors.''

Blankfein, 54, owned 3.4 million shares of Goldman common stock as of Feb. 11, according to Goldman's 2008 proxy statement. Cohn, 48, owned 2.04 million shares, Winkelried, 49, owned 2.89 million shares and Viniar, 53, owned 1.91 million, according to the same filing.

`Keep Your Money Here'

``It certainly is a reinforcement of Warren Buffett saying, `You have to keep your money in here if you have my money,''' said Eleanor Bloxham, president of the Corporate Governance Alliance in Columbus, Ohio, which provides board education and advisory services. ``It is something investors would like to see.''

Lucas van Praag, a spokesman for Goldman in New York, didn't reply to calls and e-mails seeking comment.

``Warren Buffett is known as one who relies on the people running organizations almost as much as the core business itself,'' said Michael Yoshikami, president and chief investment strategist at YCMNet Advisors in Walnut Creek, California, which manages $1 billion including Berkshire Hathaway stock. ``He not only wants managers but he wants managers who can participate in however the business grows.''

The agreement pertains to stock owned by the executives as of Sept. 28. Goldman's stock closed at $131.54 in New York Stock Exchange composite trading yesterday and has dropped 39 percent this year.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.