Goldman Sachs 2002 Annual Report Download - page 11

GO LDMAN SA CH S 2002 A N N UA L R EPO RT 9
Prom oting and Protecting Shareholder Interests
with each of the independent auditors and Director
of Internal Audit. Lord Browne also held five meet-
ings with the Director of Internal Audit. The
independent auditors and the Director of Internal
Audit each have free access to the Audit Committee
to discuss any matters they deem appropriate.
Our Compensation Committee consists of five
independent directors and is chaired by James A.
Johnson, a Vice Chairman of Perseus, L.L.C., a
merchant banking and private equity firm, and
retired Chairman and CEO of Fannie Mae. The
primary purposes of the Compensation Committee
include assisting the Board in overseeing the devel-
opment and administration of our compensation
programs and reviewing the compensation of our
executives and, to insure consistency with the firm’s
Statement of Investment Research Principles, of our
investment research professionals, and the develop-
ment, implementation and effectiveness of our
policies and strategies relating to human capital
management. In particular, the Compensation
Committee, after reviewing in detail our CEO’s per-
formance and taking into consideration an
evaluation by the Corporate Governance and Nom-
inating Committee, sets the CEO’s compensation.
In consultation with the CEO, the Committee also
determines the compensation of all of our senior
officers. In a service business, we know that
without attracting and retaining the best people, we
cannot be the best firm. Appropriate compensation
and human capital management programs are
crucial to success in this area. During fiscal 2002,
our Compensation Committee held four meetings.
In addition, Mr. Johnson met with the chairs of our
internal compensation policy committee five times.
In September 2002, we formed our Corporate
Governance and Nominating Committee, which
consists of all five of our outside independent direc-
tors and is chaired by John H. Bryan, the retired
Chairman and CEO of Sara Lee Corporation. The
primary purposes of the Corporate Governance
and Nominating Committee are to recommend
individuals to the Board for nomination, election or
appointment as members of the Board or its com-
mittees and to take a leadership role in shaping the
corporate governance of Goldman Sachs, including
developing and recommending to the Board and
reviewing on an ongoing basis the corporate gover-
nance principles and practices it should apply to
the firm. The Corporate Governance and Nominat-
ing Committee played a central role in developing
our Corporate Governance Guidelines and our
Code of Business Conduct and Ethics which applies
to all of our directors and the people of Goldman
Sachs worldwide. The guidelines and code were
adopted by the Board in February of this year and
are available on our Web site. Since its formation,
among its other activities, the Committee has con-
ducted an evaluation of the performance of the
Board and of our CEO and reviewed the CEO’s
management succession plan. The Committee also
has led the continuing search for individuals who
possess the exceptional qualities necessary to be
recommended for Board membership. Our newest
outside director, William George, the retired Chair-
man and CEO of Medtronic, Inc., and director
nominee Lloyd Blankfein, a Vice Chairman of the
firm with responsibility for our securities busi-
nesses, were initially reviewed by the Committee.
Since its inception, the Corporate Governance and
Nominating Committee has held three meetings.
CREATING LONG-TERM VALUE FOR SHAREHOLDERS
One thing that has not changed since becoming a
public company is our focus on creating long-term
value for our owners, the only difference being
that, today, our owners are no longer our part-
ners, but our shareholders. As a public company
we have worked hard to retain the elements of
our partnership culture that led to Goldman
Sachs’ success. We have also focused on the new
elements unique to public companies: creating a
world class Board of Directors and a strong
framework of corporate governance. Although
our history as a public company is less than four
years, we believe that we are off to a good start.
However, we have also learned over the past 133
years that we can never be complacent. Our Man-
agement and our Board of Directors understand
this and will always work to ensure the success of
Goldman Sachs for the benefit of our owners.