Goldman Sachs 2000 Annual Report Download - page 5

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The markets of the last months of 2000 and the first part of 2001
produced a much less favorable business environment than earlier
in 2000, reminding us that our greatest challenge remains man-
aging growth. We will be disciplined in our approach, but we will
continue to build for the future. In our business, periods of slowing
and volatility are to be expected, but they do not change our
enthusiasm about the medium to long term. And, in the short
term, they provide us with an opportunity to strengthen our
competitive position.
The untimely death of Michael Mortara in November was a loss to
the firm and to all of us who had the privilege of working with him.
Mike played an instrumental role in the creation of the
mortgage-backed securities market in the 1980s. As co-head
of our FICC Division from 1994 to 2000 and, from May 2000,
president and CEO of GS Ventures, the firm’s financial services
incubator, Mike was one of the most respected and beloved
members of the Goldman Sachs family.
Looking ahead, the changes sweeping today’s economy —
globalization, deregulation, consolidation, technological
transformation and pension reform— are creating a business
environment of great opportunities. By virtue of the firm’s
global presence, unparalleled reputation and extraordinary
people, Goldman Sachs is well positioned to seize those
opportunities on behalf of our shareholders. We are absolutely
committed to doing so in 2001 and beyond.
We continue to compete with firms with more capital than
Goldman Sachs. And, in 2000, we continued to compete
successfully. The reason is simple: Our clients choose us not just
because of our balance sheet but because of even more impor-
tant assets —our reputation for excellence and our people who
provide the very best advice and execution.
Our distinctive culture —which emphasizes integrity, entrepre-
neurship, excellence, teamwork and fairness— has allowed us
to assemble the most talented team in the business. Our IPO
further strengthened our culture by giving all our employees a
stake in the firm’s future. Today, the people of Goldman Sachs
own more than 55% of the firm, making us one of the largest
employee-owned companies in the world and the employer of
choice in our industry.
It is critical that Goldman Sachs continue to be a magnet for talent
at both senior and entry levels. This is why attracting, retaining and
rewarding the very best individuals was one of our highest
priorities in 2000. As part of this effort, in November we expanded
our senior leadership by selecting 114 new participating man-
aging directors and naming 198 new managing directors. These
individuals— the most diverse group of senior leaders we have
ever chosen —combine tested professional excellence with a
strong personal commitment to our core values.
We are proud of our accomplishments in 2000. Our scope was
truly global, with European and Asian operations representing
more than 35% of our workforce and more than 40% of our net
revenues. In key businesses — advisory services, underwriting
and trading —we are leaders in every important market in the
world. And our asset management business, already strong, is
poised for even more global growth in the future.
In 2000, we were fortunate to exceed again our financial goals
of a return on equity of more than 20% and earnings growth in
the 12-15% range. These remain our objectives. But, looking
forward, we do not expect a predictable, stable pattern of quar-
ter-over-quarter earnings increases. Goldman Sachs will
continue to seek faster growth in our investment banking and
asset management businesses to ensure greater stability in our
earnings. But fluctuating market conditions mean that the securities
industry can never attain the stability of some other businesses.
Henry M. Paulson, Jr.
Chairman and Chief Executive Officer
John A. Thain
President and Co-Chief Operating Officer
John L. Thornton
President and Co-Chief Operating Officer