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Who's who in the Goldman Sachs power struggle

April 16, 2012: 10:28 AM ET

A guide to the battle for control is playing out at the top of the Wall Street powerhouse that once dominated the financial world.

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Lloyd Blankfein, left, and Gary Cohn. Frenemies forever?

FORTUNE -- Shakespearean is a trope often used to describe the machinations of Wall Street power players, but only the Bard could do justice to the treacheries reportedly playing out at the top of Goldman Sachs. The story leaking out of the bank has all the ingredients of a classic Roman play -- a powerful leader weakened by the battle of the financial crisis and a trusted friend who sees an opportunity to grab control. The firm itself is shrinking in the wake of Dodd-Frank legislation, a spate of partners left this year, and shares have lost about 25% since Blankfein became the CEO in 2006.

Goldman declined to comment, and company spokespeople have maintained for months that there's no real story to discuss until the firm announces a succession plan. Even so, all the world (well, the financial world) is watching 200 West Street. Here are the most interesting players to follow as the investment bank's fifth act unfolds.

Lloyd Blankfein, CEO and chairman of the board

When times were good at Goldman (GS), Blankfein's main concern was how to keep the investment bank growing. His self-deprecating sense of humor helped mask the ruthlessness that former partners say propelled him ever higher in the organization. Since the 1970s, the CEO role has often been shared between two people, but Blankfein has been in the top spot all alone and he has been saying that he has no plans to leave.

But recent reports say that a growing chorus of shareholders wants Blankfein to step aside. He was, after all, the boss pre-credit crisis; overseeing activities that were later called fraudulent by the SEC and investigated by the Senate. Questions about integrity under his leadership were raised again this spring when mid-level manager Greg Smith quit and wrote aNew York Times editorial that said the bank's main goal was to make money by duping clients. Blankfein fought with a powerful shareholder, the American Federation of State, County and Municipal Employees (AFSCME), to keep his job as chairman of the board. And he just took a 35% pay cut.

After two years of rumors about a possible departure, even some within the firm wonder whether he should go. Those critics may even include his long-time number two and close friend Gary Cohn.

Gary Cohn, president and chief operating officer

Cohn has been Blankfein's right hand man since he started working as a trader at Goldman in 1990. Over the years, the two became friends and confidantes, but the New York Post reports that the relationship between the two men has deteriorated. This comes as little surprise. While Blankfein was telling anyone who would listen that he wanted to stay atop the bank for another few years, a Goldman partner and a source close to the board told Fortune in February that Cohn had successfully jockeyed to become Blankfein's successor, and that the changeover could happen as early as this summer. The Wall Street Journal reported in March that the firm did indeed have a contingency plan in place that would make Cohn the CEO and Blankfein the chairman, should shareholders force the bank to shake up the C-suite. (A claim that Goldman denied.)

Other Wall Street CEOs have told Fortune that unless Cohn gets the top spot this year -- while there is no other obvious successor lined up -- they don't believe that he will ultimately get the job. There is a perception, true or not, that the two men are very similar leaders, and that their rough-and-tumble style has transformed a formerly client-centric culture for the worse. As Blankfein once told Fortune, "We didn't have the word 'client' or 'customer' at the old J. Aron [the metals trading division where he worked with Cohn for years]. We had counterparties - and that's because we didn't know how to spell the word 'adversary.'" Since both Blankfein and Cohn are believed to embody this attitude, making Cohn CEO may not satisfy shareholders who want real change at the top.

People have already begun to bet on how long Cohn will keep his job if Blankfein stays. That may greatly depend on whether Blankfein can work with a man who seemingly saw him at his weakest and made a grab for his job.

John Rogers, executive vice president, chief of staff and secretary to the board

Former Goldman employees say that, since becoming chief of staff in 2001, Rogers has helped foster what is known on the Street as The Goldman Way -- a strict cone of silence that surrounds the firm, protects employees as much as possible from scrutiny, and keeps things like executive internecine warfare far from the public eye. Family business at Goldman is often messy and succession in the past has been chaotic, but, as one former executive put it, the world didn't get to watch the show in real time. But the company's dirty laundry has been aired very publicly over the last few months, and Rogers himself was outed as a chief negotiator between Goldman and the union that pushed to split Blankfein's chairman and CEO roles. Despite best efforts, no one, not even Rogers, has the power to keep partners from leaking details about goings on at the firm.

J. Michael Evans, vice chairman and global head of growth markets

Long before Cohn was moving in on Blankfein's job, Evans was reportedly putting his hat in the ring. The investment banker and Olympic gold medalist (rowing, Canada) was promoted last January to a newly-created position overseeing the firm's emerging markets business. Almost immediately there were rumors that he would be the next CEO, particularly given that he was actively working to fix Goldman's damaged reputation. He was the head of the Business Standards Committee, which was formed to change the way the bank treated clients.

A Goldman partner tells Fortune that Evans hoped to use the scrutiny surrounding Goldman's current culture, widely viewed as the creation of Blankfein and Cohn, to gain control and influence at the firm. But at that time the board ultimately remained loyal to Blankfein, says a source close to the board, and it seemed that Evans was on his way out. Or was he? A Bloomberg column asserts that Evans actually benefited from the Greg Smith brouhaha. With the "public indictment of Goldman's culture under the leadership of Blankfein and Cohn," Bloomberg argues that "the Machiavellian Evans… can be presented to the Goldman board -- and to the public -- as a worldly, client- oriented, cleaner-than-clean savior and return of the old-school style investment-banker at Goldman."

John Bryan, lead director, Goldman Sachs board

A twist was thrown into the Goldman power struggle when the board created the position of lead director, a move that was reportedly made to satisfy shareholders who wanted to divide the roles of chairman and CEO between two people. As one Reuters editorial put it, Blankfein has effectively controlled the board and "in recent history the board has been more of a problem to be managed than a powerful entity to whom the CEO is accountable."

Rather than strip Blankfein of the chairman job (or, worse, the CEO role), the WSJ says that the company created the lead director position. This director will, among other things, evaluate the performance of the chief executive. AFSCME said that this lead director would "provide a much-needed and vital check on the company's practices and conflicts of interest." The new role went to Bryan, a former-CEO and longtime board member of Sara Lee, who is retiring this year. Looked at through the lens of compensation (arguably the metric that matters most on Wall Street), it seems that Bryan had mixed feelings about the CEO's performance. Blankfein's overall compensation shrank, and his bonus dropped from $5.4 million last year to $3 million this year. But his base salary more than tripled from last year.

James Schiro, Goldman board member and former CEO of Zurich Financial Services

When Bryan retires this year, Schiro will become the lead director. He will also be the chair of the corporate governance and nominating committee. Schiro has been a Goldman director since 2009; and unlike Bryan, he is steeped in the world of financial services. In addition to running Zurich Financial, Schiro was also the CEO of accounting firm PricewaterhouseCoopers. If Blankfein stays on as CEO through this year, it will be Schiro who evaluates his performance going forward.


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About This Author
Katie Benner
Katie Benner
Writer, Fortune

Katie Benner joined Fortune in October 2006. As a writer for the magazine and the website, she focuses on Wall Street and the economy. Prior to joining Fortune, Benner worked at TheStreet.com, CNNMoney, and as a freelancer in Beijing for China International Business, the South China Morning Post, and as a columnist for Beijing Review. She has a B.A. in English from Bowdoin College.

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