In the banking world, they’re considered the masters of the universe, the members of the most exclusive club on Wall Street. But for all the trappings, being a partner at Goldman Sachs may no longer be as lucrative for some, while the spots in the club may be shrinking.
Last month, some of Goldman’s elite partners, the highest executives at the banking, securities and investment management firm, took as much as a 30% cut to their bonuses. Sources tell Quartz that not all Goldman partners saw cuts in their bonuses; the pay cuts were in specific areas in which the bank performed poorly such as fixed-income trading, while the pay for some others was up to roughly flat from the year prior.
A Goldman spokesman declined to comment.
Goldman has been cutting costs since posting lackluster results last year. Year-over-year profits in the fourth quarter were down by 13%, and overall compensation was down about 3% compared to a year ago.
The pay reductions still leave partners as some of the highest paid on the street. Partners at Goldman, which typically represent about 1% of Goldman’s 32,900 work force, typically get paid anywhere from $3 million to $6 million apiece, including base salary and bonuses.
Meanwhile, the company’s already declining partner ranks (paywall) may continue to shrink when it names a new partner class this year (its partnership classes are decided every two years), insiders tell Quartz. The company last anointed about 70 new partners in 2012, 36% fewer than its 2010 selection. Cutting partner pay is one way to keep its partner numbers from climbing even as it welcomes a new class (partners disgruntled over pay often retire or find new jobs).
Goldman isn’t the only financial institution trimming staff and pay in the wake of feeble profits. Credit Suisse last year dropped hundreds of investment bankers from its payroll, and apparently replaced them with a cadre of cheaper junior staffers fresh from business school.
In a way, the partner turnover could offer more opportunity for young would-be masters of the universe to join the fabled investment bank, but smaller partnership classes can make hitting that level more elusive. The grueling hours required to rise through the ranks at a firm like Goldman could also seem more miserable when the highest rewards are smaller or harder to attain.