Goldman Sachs's Partnership Is Shrinking
September 04 2019 - 6:47PM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc.'s elite partnership is shrinking.
As many as a dozen Goldman partners are negotiating their exits
from the firm and likely to depart by year's end, executives said.
They would add to a spike in departures already this year among
Goldman's partners, whose title has inspired envy across Wall
Street for decades but lost some of its luster in recent years.
Elisha Wiesel, Goldman's chief technology executive, and Steven
Strongin, who runs the firm's research operation, are among those
who are discussing stepping down, according to people familiar with
the matter.
A senior partner in stock trading, Jeff Nedelman, quit on
Wednesday, other people familiar with the matter said. Martin
Chavez, who was co-head of Goldman's trading division and, before
that, its chief financial officer, announced his retirement on
Tuesday, saying, "the last thing I want to do is be in anyone's
way."
In all, up to 15% of Goldman's partners may leave this year, far
higher than typical turnover. Fewer are rising to take their place:
Goldman last year named 69 new partners, its smallest partner class
in two decades.
The partnership is a carry-over from Goldman's past, when top
employees risked their own money to finance trades and underwrite
securities. Today's partners now own a token slice of the firm, but
Goldman continues to select a new class every other year to
safeguard its culture and groom future leaders.
Chief Executive David Solomon, who took over last fall, in some
cases is deliberately culling a partnership he sees as bloated,
according to people familiar with the matter. In boom years before
the crisis, Goldman promoted bigger classes. In lean years after,
it added seats for legal and compliance executives.
The group peaked last year at nearly 500, up from 221 when the
firm went public two decades ago, and as the partnership has grown,
some executives believe its allure has faded. Mr. Solomon and his
lieutenants aim to keep its ranks aspirational and weighted toward
rainmakers.
They must also clear out space for leaders in the new consumer
businesses Goldman is building. The founder of a personal-finance
app Goldman bought this year joined as a partner, as did the CEO of
a wealth-management firm it acquired.
Uncertainty over Goldman's future has prompted other departures.
The firm has spent more than $1 billion on a Main Street pivot that
has yet to bear fruit. Management changes have shaken up reporting
lines and rattled some old-timers. Bonuses have fallen, and Goldman
shares are down 22% from their 2016 high.
The risk-taking traders who once ruled Goldman under Lloyd
Blankfein have been replaced by investment bankers in Mr. Solomon's
inner circle. Traders account for many of the departures; two
longtime executives in that unit, Brian Levine and Justin Gmelich,
were played off the floor by tasseled marching bands earlier this
year.
Some partners have left for big paydays elsewhere. Joe Todd, a
longtime investment banker, went to boutique bank Evercore Partners
Inc., which gave him a six-year contract, according to people
familiar with the matter -- the kind of assurance Goldman won't
make.
More departures are expected -- many of them not entirely
unwelcome by Mr. Solomon and his team. Last year, the firm set up a
program to connect partners to boards and other charitable
opportunities, hoping to coax some out the door, people familiar
with the matter said.
Mr. Strongin, a former Federal Reserve economist, joined Goldman
in 1994 and runs its research department, which writes reports on
stocks and economic trends. He has been a partner since 2002.
Mr. Wiesel joined Goldman straight out of college as a coder in
its commodities-trading division and in 2017 was put in charge of
the firm's engineering force. He is the son of Elie Wiesel, a
Holocaust survivor and author who died in 2016.
He is pursuing a philanthropic project that may be affiliated
with Goldman, one of the people familiar with the matter said.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
September 04, 2019 18:32 ET (22:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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