George W. Bush, US president, who has been seeking a replacement for U.S. Treasury secretary, John Snow, for months, nominated Hank Paulson, chairman and chief executive of Goldman Sachs (GS-$149.83). President Bush hailed Mr. Paulson's Wall Street credentials and cited his record as "a strong and consistent voice for corporate accountability".
Mark Twain once said: “Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't.”
What follows are actual minutes from the first hearing, convened on January 28, 2003, before the Senate Finance Committee (108th Congress), to discuss the nomination of Dr. John W. Snow to be the Secretary, U.S. Department of the Treasury.
The 10Q Detective has taken liberties with the opening statement of the Honorable Senator from Iowa, Charles Grassley, Chairman of the Committee. The intent is to show our readers that even substituting fiction for fact, when it comes to politics and business, ethics never seem to change--especially when it comes to being the voice of accountability.
[FICTIONAL] Opening Statement of Sen. Chuck Grassley—Finance Committee Hearing, Nomination of Henry M. Paulson, Jr. for Secretary of the Treasury:
“Good morning, and welcome to a special hearing of the Senate Finance Committee for the 109th Congress. All of you are distinguished members and will contribute to the work of the Finance Committee. And of course, I welcome back all returning members to the Committee and particularly you, Senator Baucus (D-Montana). While the gavel may change hands, I don't expect anything to change regarding our good working relationship here on the Committee.
I want to emphasize right off the bat that the office we are considering today is a very important part of our constitutional responsibility. We need a person who can quickly tackle the challenges a Treasury secretary faces. We need a "can do" type of person.
The matter at hand today is the nomination of Henry M. Paulson, Jr. to be Treasury secretary. The Treasury secretary is, after the vice president, perhaps the most important position in the President's cabinet. Given the importance of the office of Treasury secretary, this committee has a bipartisan tradition of acting expeditiously on the nomination. We should not needlessly delay in carrying out our constitutional role with respect to this important position. I ask my colleagues on both sides of the aisle to help us move this nomination quickly. I expect the nominee and the administration to quickly answer questions that may arise.
I want to thank the nominee for his cooperation and his willingness to withstand the heightened scrutiny that has developed over recent years. In the course of our work on this nomination, we have found that Mr. Paulson participated in boardroom coups (the 2003 ouster of the NYSE's autocratic leader Dick Grasso) and executive compensation arrangements that were typical of senior executives in Fortune 500 companies. These kinds of arrangements were the subject of reforms in the Sarbanes-Oxley legislation.
The Finance Committee's retirement plan legislation also tackled many of the excesses in executive compensation. Unfortunately, that legislation was held up in the gridlock of last year. I intend to pursue the retirement plan legislation again. It's clear to me that we need to change the tax code and ensure that abusive executive compensation arrangements don't return.
Many have had questions about Mr. Paulson’s compensation package. Suffice to say, Mr. Paulson earned $38.8 million in total compensation for FY 2005.
Reviewing Goldman Sach’s recent Proxy Statement, filed with the SEC in February 2006, Senator Baucus and I believe that we have now a fairly good understanding of Mr. Paulson’s pay and benefits at Goldman Sachs: Base Salary of $600,000; Restricted Stock Units & Options worth $37.4 million; “Total Annual” Benefits and Perquisites totaling $255,000—of which $153,931 was for a car and driver; Dividend Equivalents on All Prior Years’ Restricted Stock Units totaling $527,000; and, [silent applause] the Committee would like to recognize Mr. Paulson for his investment acumen—Hank, you did not have to be so modest and bury deep in the report that you also earned $1.7 million in proprietary trading profits.
We've shared with members and the media the answers to those questions. Reasonable people can disagree, but it appears that Mr. Paulson’s pay and benefits are typical of a CEO after the Sarbanes-Oxley legislation. While people want to dwell on what Mr. Paulson made, I think it important to also bear in mind what Mr. Paulson is giving up to take the position of secretary of Treasury. Even though all his restricted stock units and options will fully vest upon his leave from the Company, Mr. Paulson will only own 6.05 million shares, worth approximately $907.5 million. Mr. Paulson is forfeiting millions more in salary, benefits, and bonuses by taking this position, which pays only $183,500 per annum.
Mr. Paulson will bring to the Treasury Department a distinguished background of business experience and prior public service. Most importantly, Mr. Paulson is a proven leader with a steady focus on long-range projects and short-term challenges. This focus on short-term problem solving and long-term planning is what the nation needs for a Treasury secretary. As one of our nation's principle economic policy makers, the Treasury secretary must face our nation's sluggish economic performance straight on.
In sum, Mr. Paulson has a reputation of "getting things done." That's good news, because that's what the message was from the election and what Senator Baucus and I want to do on the Finance Committee – get things done for the American people.
We welcome Mr. Paulson in helping us achieve that goal.
Before I conclude, I'd like to discuss international trade. Tax policy is not the only issue that matters to this committee or to the Treasury Department. Expanding international trade is critical to America's economic growth and security. And as Mr. Paulson grew up on a farm, he knows the importance of international trade to America’s heartland.
Treasury, as a steward of the U.S. economy, has always played an important role in the formulation and implementation of U.S. trade policy. As I stated many times last year, I don't want to see this role diminished, even as parts of the Customs Service are moved to Department of Homeland Security. I hope the nominee shares this view. I look forward to hearing from Mr. Paulson….”