Goldman partners: Achieving partner status at Goldman Sachs is like winning the decathlon of the Olympics of banking. And the degree of difficulty in the latest biannual competition, which anointed 110 new medal winners, rated higher than ever. This crop has not only survived two years of financial mayhem but also Goldman’s special publicity and regulatory hell. That means achieving Elite Status membership now warrants an extra point of pride. Yet these victors may lay claim to lesser spoils.
Entering the Goldman inner circle is about more than just bragging rights. It may not come with quite the same influence it did in the 130 years leading up to the firm’s conversion from private partnership to public company in 1999. The salary hasn’t improved either; it’s the same $600,000 it was back at the time of the IPO. But partnership still provides plenty of other perks, not least of which is access to a slice of a special bonus pool above and beyond what is doled out to the bank’s lesser mortals.
It hasn’t been getting any easier to impress the judges.
Though Goldman has in recent history maintained the partnership ranks at a little less than 2 percent of its full-time staff, this time around roughly one of out every 240 of them was added to those who wear the garland, bringing the count to 470. When the good times rolled four years ago, closer to one in 190 were brought into the fold.
Of course, Louis Vuitton bags and Ferretti yachts can’t be paid for in pride. And there could be less lucre available to the Goldman Class of 2011. The firm is revamping its business model to adjust to a brave new post-crisis world. It’s not that Goldman hasn’t adapted to change well in the past, but fewer bets with the house’s money, greater regulation, lower leverage and higher capital requirements all will put the model to a more serious test.
They’ve already taken a toll. Goldman’s 24 percent return on tangible common equity over the past 11 years is moving in the wrong direction, slipping to less than half that over the last two quarters. And payouts to the privileged club are more highly geared to the firm’s performance than for other staff. Those who achieve Goldman partner status may still be faster, higher, stronger – just not necessarily richer.
