NYSE begins reforms

NEW YORK — John Thain, chief operating officer and president of Goldman Sachs Group Inc., was named chief executive of the New York Stock Exchange on Thursday as part of an effort to restructure the institution following a damaging pay scandal.

Thain, 48, will start the job Jan. 15, and will receive total annual compensation of $4 million. In accepting the post, he replaces John S. Reed, who was brought in three months ago to help reform the NYSE’s governance after former chairman and CEO Richard Grasso resigned amid a furor over his $188 million pay package.

"I am deeply honored to accept this call to service," Thain said at a news conference where he was introduced. "Let us work as one to restore investor confidence and to ensure the reputation of the New York Stock Exchange rests securely on the firm foundation of integrity and excellence."

Reed, who plans to stay on as interim chairman until a permanent replacement is found, said Thain would bring "a professionalism, a competence and … a level of integrity that is extremely important," to the chief executive’s job.

"I can’t think of a better set of hands to take charge of the exchange at this time," Reed said. "We have an exceptional person at a time when, frankly, we require an exceptional person."

Reed, the retired co-CEO of Citigroup Inc., reiterated that he was not interested in a permanent job at the exchange, but did say he’d be willing to stay on as a board member if he was needed.

Thain’s appointment comes a day after the Securities and Exchange Commission unanimously approved Reed’s proposed overhaul of the NYSE’s governance structure — a plan that includes separating the positions of chairman and CEO to avoid concentrating excessive power in one person.

Some critics have questioned whether the adopted reforms have gone far enough to eliminate conflicts of interest at the NYSE, a quasi-public institution charged with monitoring its own trading floor for fraud.

The plan, which was overwhelmingly approved by the NYSE membership, established a smaller and more independent board of directors to oversee regulation and called for the appointment of an autonomous chief regulatory officer. Reed said the board was close to appointing someone to that job, but the details have not yet been completed.

The remaining members of the NYSE’s former board, which was blasted for being dominated by financial industry executives, resigned Wednesday, and a new, smaller and more independent board took its place. In one of its first official acts, it appointed 19 members to a new 22-member board of executives, an advisory panel meant to represent the interests of investors, listed companies, seatholders and firms that conduct business on the exchange floor.

Thain’s appointment may come as a disappointment to those who were hoping the new NYSE chief would come from outside Wall Street. Goldman Sachs is one of the most prominent investment firms in the financial industry. A 25-year veteran of the firm, Thain was widely considered the heir-apparent to chairman and CEO Henry M. Paulson Jr.