NEW YORK (CNN/Money) -
The New York Stock Exchange Thursday named Goldman Sachs president John Thain to be its new chief executive as the world's largest stock market continues to revamp its structure in the wake of a series of scandals.
Thain will succeed John Reed, who has been serving as interim chairman and CEO of the NYSE since Richard Grasso resigned in September amid controversy over the size of his pay package.
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| John Thain |
Upon acceptance of the position, which he will take officially Jan. 15, Thain said his goal will be "to ensure the most liquid exchange, that may [mean] more electronic trading, but that remains to be seen."
Thain, who has an undergraduate degree from Massachusetts Institute of Technology and a masters in business administration from Harvard, is known for pressing technology, which some at the exchange could see as a threat to its specialist system. Specialists match investors' orders to buy stocks with orders to sell them on the floor of the exchange. There has been rising speculation, especially in the wake of Grasso's resignation, on the fate of the specialist system.
However, Thain said Thursday "it's very important the exchange's specialists retain their role." Goldman Sachs owns the second largest specialist firm, Spear, Leeds & Kellogg.
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 The New York Stock Exchange named John Thain, president of Goldman Sachs, to be its new CEO. CNNfn's Chris Huntington reports.
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But critics of Thain's appointment say the conflict doesn't lie with his attachment to Spear, Leeds & Kellogg. "It's more with his [influence] on Wall Street," said Paul Hodgson, senior research associate with the Corporate Library, a research firm specializing in corporate governance.
"A lot of other candidates from the wider financial industry wouldn't raise the notion of a conflict of interest," Hodgson said. He did not name any other potential candidates for the position.
When asked about naming a top executive from one of Wall Street's largest investment banks as chief executive of the world's largest stock exchange, Reed said "the idea of having someone that knows nothing about the floor or trading is a non-start."
"To name a great executive, say from the aerospace industry, who [is unfamiliar] with trading didn't make sense. We felt we had to look in the industry."
The choice of Thain also left some Wall Streeters scratching their heads.
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"If you wanted independence, how do you pick a guy that was one step away from leading a company that owns the second-largest specialist firm on the exchange?" asked Seth Tobias, who runs Circle T Partners, a New York-based hedge fund. In a story written two days ago, Tobias said he was short Goldman Sachs shares.
Reed approached Thain a couple weeks ago and Goldman Sachs' CEO Henry Paulson did not have any role in the appointment.
Reed said he will stay on as interim chairman until a new chairman is appointed. He added that if asked, he would stay on the NYSE board, and Thain commented he would like Reed to remain on the board.
Reed also said the exchange is close to naming a new regulatory head and would likely announce that choice soon.
No retirement package
As for Thain's salary, Reed said the new NYSE CEO will receive annual pay of $4 million, but will not partake in special retirement packages, nor will he have a contract. The $4 million will include Thain's salary and a bonus. The size of Grasso's pay package at the time he resigned was $140 million and covered retirement and incentive benefits over his 36 years at the exchange
Reed said Thain's compensation is comparable to that of CEO's at other stock exchanges, but it will be a step down from his high-roller days at Goldman.
In 2002, Thain received a salary of $600,000, a bonus of $5.8 million and restricted stock worth $2.3 million. In 2001, he pulled down a salary of $600,000 and a bonus of $10 million, but no stock, according to a Goldman Sachs proxy filing.
Thain's departure was somewhat of a shock for Goldman. The company named Lloyd Blankfein as its new president and chief operating officer. Shares of Goldman Sachs, which also released its fourth-quarter results Thursday, shed slightly more than 1 percent in afternoon trading.
Reed, the former CEO of Citigroup, jumped into the interim position three months ago amid the fallout from Grasso's pay.
The public uproar over Grasso's compensation, especially his retirement package, and a probe of misconduct by specialist floor traders have rocked the NYSE, the last major exchange still dominated by the open outcry trading system in which specialists match up buyers and sellers.
The exchange has been moving to increase its governance amid the controversies. The U.S. Securities and Exchange Commission approved Wednesday the NYSE's plan to reduce the size of its board and split the roles of its chairman and CEO.
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