How Goldman Sachs keeps its mystique

Goldman Sachs is keeping a tight grip on one of its most valuable assets: the job title of “partner.”


November 16, 2020

Legendary comedian Groucho Marx famously said, “I don’t want to belong to any club that will accept me as a member.”

Well, there’s a place in corporate America where this aphorism is decidedly not true: a club of Goldman Sachs partners.

Every 2 years, the investment bank hands out its highest title (“partner”) to a group of employees. This year’s incoming class of 60 partners is the smallest — and most diverse — since the bank’s IPO in 1999.

Goldman partners date back to the 19th century

In 1882, Marcus Goldman and Samuel Sachs formed a partnership that operated a commercial paper business (fun fact: this is why Goldman’s retail banking business is called Marcus).

In the partnership structure — which added new people over the decades as Goldman grew into a banking behemoth — profits would be distributed by however many shares each partner held in the business.

After Goldman’s IPO, any old pleb investor could own shares in $GS and participate in the bank’s profits.

Creating a new exclusive class

Finance writer Marc Rubinstein notes that the official title for a Goldman partner is actually “participating managing director.”

And here’s what Goldman’s biggest ballers get to participate in:

  • Good: A base salary of $950k
  • Great: Access to Goldman-exclusive investments
  • Best: The title of “partner”

Of Goldman’s 38k employees, only 400-450 are partners (~0.01%).

“The firm has to manage the cost of disappointing those who missed out,” writes Rubinstein, “with the benefit of protecting the value of its currency.”

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