At a Museum of natural history benefit soon after the sale, the wife of a partner asked Ellen Schwarzman, the daughter of a wealthy Ohio manufacturer, “How do you feel?”

“Rich,” she joked.

Her husband Stephen, thirty-seven,* who owned 2,000 shares, pocketed $6.1 million from the transaction. But he was miserable, and in mid-1985 Schwarzman negotiated a financial arrangement with Shearson officials that permitted him to join Peterson in the formation of the Blackstone Group, a new private investment banking firm.

For a relatively modest investment of their own capital—de Saint Phalle says he put up about $150,000 to own about $4 million in shares, before the premium—partners walked away with a princely sum. Because there were two classes of stock—common and preferred—and senior partners owned more preferred stock, each partner was paid differently. And because partners also participated in private investments that were liquidated, many partners received more money from the sale than the price paid by Shearson/American Express. Here, from authoritative Lehman sources, is a score-card on how certain partners made out on the sale:

Richard Bingham, forty-eight, a board member and chief of the San Francisco corporate finance office, who owned a bit more preferred stock than Schwarzman, who had less seniority, netted $6.5 million for his 2,000 shares.† After the merger, the redheaded former Kuhn Loeb banker who stayed clear of internal Lehman squabbling and plots continued to stay clear of New York office politics by remaining in San Francisco, where he runs the West Coast corporate finance office of the combined firms.

James Boshart, thirty-nine, also owned 2,000 shares. Because he held fewer preferred shares, he realized $6.2 million. Boshart was one of two of the partners who signed a noncompete clause and then decided to leave soon after the merger. With Jeffrey Lane filling the chief administrative slot, Boshart would be forced to accept a lesser role. In the end, this likable former basketball star was as estranged from many of his partners, as was Bob Rubin. He purchased a house in Colorado and went skiing with his three children. True to his nickname, “the Boy Scout,” Boshart preferred staying home for three years—which he was still doing in the summer of 1985—to working alongside his special demons, Solomon, Schwarzman and Altman.

Quiet William Welsh, fifty-three, who was popular among his partners, received $7.7 million for his 2,000 shares. Just months after signing the noncompete clause, and after failing to reclaim his old job as head of New York retail sales operations, Welsh decided to retire to study foreign languages and travel around the world. In the winter of 1985, he sent postcards from Bora Bora to his former colleagues.

Managers who ranked above Bingham, Boshart and Welsh, but just below the top rung, owned 2,250 shares. Glucksman’s ally Henry Breck, forty-seven, the former C.I.A. official and longtime banker who became head of the money management division over Peterson’s opposition, pocketed $8.2 million for his 2,250 shares. After the merger Breck continued to run Lemco, but was asked to report to Francis Froenkel, a Shearson employee who runs its managed assets division. In May 1985, Breck was relieved of his responsibilities as head of Lemco.

François de Saint Phalle, thirty-seven, received $7.4 million for his 2,250 shares. In the merged firm the man partners referred to as “the pro,” after sharing responsibility with a Shearson executive for the capital markets group, now runs this operation alone and is invited to travel to China with Peter Cohen.

Roger Altman, thirty-seven, who had been a Peterson protégé and then ingratiated himself with Glucksman, also served on both the board and operating committees. Because he left Lehman to serve in government, his 2,230 shares were worth less. Altman collected $6.6 million. After the merger and after his candidate for president lost, Altman lobbied for and was a leading candidate to become New York’s Deputy Mayor of Economic Development. But Mayor Edward Koch chose someone else. Altman now works in the banking department of the new firm. But he has less time to call on his valued contacts since, in the fall of 1985, Altman began teaching two days a week at the Yale School of Organization and Management.

William Morris—“the cynic”—one of three “senior bankers” who had complained about the 1983 bonuses and shares and was hushed with a generous boost in his bonus and the retention of his 2,500 shares, received $9.5 million. In March 1985, Morris decided to work only part-time and became a senior adviser to Shearson/Lehman Brothers.

Harvey Krueger, fifty-five, the former president of Kuhn Loeb, kindly “Uncle Harvey,” who got along with everyone but Bob Rubin, pocketed $9.1 million. This “senior banker” continues to service his stable of banking clients for the merged firm. He now has the wealth to devote even more time to his favorite Jewish charity, and in June 1985, Krueger became chairman of the board of governors of Hebrew University in Jerusalem.

Peter Solomon—“the brat”—received $7.8 million for his 2,400 shares. (He and Krueger had donated 100 shares to charity in 1983.) The man who dared offend Glucksman landed on his feet just weeks after the merger when he was put in charge of the mergers and acquisitions department.

Solomon, forty-five, owed his appointment to his sometimes secret ally, Shel Gordon. The soft-spoken Gordon, who supervised banking and quarterbacked the behind the scenes maneuvering to sell the firm, netted $7.8 million on his 2,750 shares. Gordon, forty-eight, also emerged as the Lehman official with the highest rank in the new firm. In addition to being put in charge of all banking activities, he was appointed a senior vice chairman of Shearson/Lehman Brothers, given a place on the board of directors and on the planning group, which runs the merged firm.

Richard S. Fuld Jr., thirty-eight, who supervised all trading operations at Lehman, netted $7.6 million for his 2,750 shares. He, too, was made a senior vice chairman, a board member, and placed on the planning group of the merged firm. He now runs commercial paper, government, mortgage and money market securities. Fuld currently ranks number two, behind Shearson’s Herbert S. Freiman, who supervises all trading activities.

Lew Glucksman’s 4,500 shares netted him $15.6 million. Glucksman became a consultant to American Express, signing a four-and-a-half-year noncompete clause that gave him an annual salary for which, says Jeffrey Lane, “he can watch ships but can’t go to work for Morgan Stanley.” In the months immediately after the merger, Glucksman was named an executive vice president in charge of an expanded financial insurance group, including the troubled Fireman’s Fund Insurance Corporation. The former chairman of Lehman now reported to an American Express executive vice president.

Robert Rubin’s 2,750 shares included more preferred stock, so he pocketed $10.3 million. Rubin, fifty-two, also signed the same noncompete contract as Glucksman, and had more time to watch ships. In March 1985, Rubin let it be known that he planned to resign, and opened a one-man financial consultancy with an office overlooking Lehman’s former One William Street building. That same month, Glucksman also resigned, saying he had moved to the Jersey shore and planned to open his own financial consulting firm—Glucksman & Company—in Princeton, New Jersey, where he will be closer to his fishing boat. One of his clients is American Express.

Pete Peterson got about $6 million from the sale on top of the $7 million he had received when he cashed out in the summer of 1983.

In exchange for his 1 percent of profits agreement, Peterson agreed to a cash settlement of $200,000 a year for the remainder of his five-and-a-half-year severance contract. Add to this sum the $650,000 he (as well as Glucksman) received in the fall of 1983 for his 1 percent of profits, the $13 million collected for his Lehman shares and the premium, the $1.5 million bonus he received in 1983,* the more than $1.5 million in supplemental retirement benefits (office allowance) for five and a half years, and the sum that Peterson walked away with was about $18 million—$23 million if one counts the $5 million Shearson ultimately agreed to invest in Peterson, Jacobs.

Those junior partners or young associates, who had accumulated little or no equity, did less well. Robert B. Millard, who was made a partner in September 1983 and who ran risk arbitrage at Lehman, didn’t have enough time invested. The sale, Millard admits, “came a little early for me”—he made only $900,000 on his 500 shares of stock, plus an unspecified amount that Shearson threw in from the approximately $50 million ultimately set aside for younger partners and associates. Those associates on the brink of becoming partners had no stock to cash in; they lost, forever, the promised brass ring held out to them when they were recruited—that they could become a partner at Lehman Brothers.

At least one new partner made a surprising windfall—former brigadier general and Heisman Trophy winner Pete Dawkins, forty-six. Just seven months after he joined Lehman to direct the public finance department and was given 500 shares of Lehman stock, Dawkins found himself more than $1 million richer. He also found himself number two in the public finance division, reporting to a Shearson executive. Dawkins said he spent his time “looking after the relationship component of the business.” After a rough initial period, in May 1985 Dawkins landed on his feet. He was promoted to a top job in the banking division, where he was placed in charge of business development. Another new partner recruited by Glucksman, Alan Finkelson, decided in mid-1985 to return to the practice of law, and was welcomed back as a partner at Cravath. Chief financial officer Michael Schmertzler, who was part of Lehman’s negotiating team, also decided to leave and join Morgan Stanley. He claimed that since he was joining them as a banking partner, such a move did not violate the noncompete clause because he would be performing a totally different function than the one he performed at Lehman. Fearful of setting a precedent, Shearson has taken Schmertzler to court, blocking, at least for a time, his move to Morgan Stanley.

There was one other surprise—in April 1985, Shel Gordon said that he was fatigued with the administrative, or people, side of the banking job and wanted to step aside. The decision was “his choice, not ours,” says Peter Cohen. He admits that Shel was “uncomfortable making tough decisions” and that Shearson executives prodded him to “make a decision,” but nevertheless he says that Gordon was welcome to remain in charge of banking. Some Lehman partners groused that Gordon, typically, did not want to antagonize anyone, so decisions backed up. That Gordon would decide to step down was not a first. He had given up a big job in 1972 as president of a subsidiary of the Philadelphia Life Insurance Company to join the faculty at the Wharton Graduate School. This time, Gordon would stay with the parent company, accepting what he calls a more “challenging” position as head of the Shearson/Lehman Brothers investment committee. He will now guide the merged company’s performance in merchant banking. “I’ve spent the last ten years of my life managing people,” said Gordon. “My real love is as an investor. I told someone I’m going to repot the plants.”

To step into Gordon’s shoes in banking, Shearson’s management chose Peter Solomon, who also remained head of the M. & A. department. Instead of directing the banking division alone, as Gordon did, Solomon is now listed as co-director with Shearson’s Sherm Lewis. Nevertheless, fearless Peter Solomon, the outspoken self-described “voice in the wilderness,” who felt he had never received the title and recognition he deserved, had emerged as the great survivor. Did Solomon see irony in this twist of events? “I’ve always been underrated,” Solomon answers. “I was the last person taken off the waiting list in my entering class at Harvard. And I was the first in my class to be nominated a Harvard overseer. That’s the story of my life.”

*All ages in this chapter are as of April 1984.

†Throughout this section the number of shares refers to common stock. The proceeds from the sale given for each partner includes the value of his preferred stock as well.

*In fairness, Peterson was at Lehman through 1983 and was entitled to a bonus.