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Partnership Day At Goldman Sachs!

Wednesday, 17 Nov 2010 | 2:08 PM ET

Goldman Sachs named 110 new partners, according to an internal memo obtained by Financial News.

The Goldman Sachs booth on the floor of the New York Stock Exchange
Getty Images
The Goldman Sachs booth on the floor of the New York Stock Exchange

Goldman partners, who are officially called Partnership Managing Directors or PMDs, get an increased base salary, the opportunity to invest in Goldman deals, a discount on Goldman stock purchases and a share in the partner compensation pool, among other perks. These latest PMDs join the firm’s existing 375 partners. Goldman names new partners every two years.

Goldman partners typically take around 20 percent of the firm's total compensation pool. That money is divided up between partners according to a secretive "points" system. Basically, each of the partners is assigned a certain number of points by the head of his department. The more points you get, the more you get paid.

Here's how I described it last year:

Right off the bat, Goldman's senior executives—known as PMDs for partner managing directors—slice off a huge chunk of the revenue. In 2007, the top guys took around 20% of the total. This means that if compensation comes in at $20 billion this year, that’s $4 billion for Goldman’s 400 or so PMDs. If these guys and gals divided the money evenly, each PMD would take home a cool $10 million each.

But even among the senior executives, Goldman is not an egalitarian fraternity. As Duff McDonald reported back in 2005, each PMD has a certain amount of “points” in the partnership pool. In a typical year, something like a quarter to a third of that $4 billion gets handed out according to the points system.

Let’s say this year it’s a quarter, leaving $3 billion. What happens to that $3 billion is a yearly source of contention, controversy, rivalry and envy. Basically, the PMDs get paid according to what the really top guys—guys who run entire departments—think they should get. If there’s some secret formula guiding the discretion, no one has ever discovered it. Certainly, the biggest earners for the firm are favored. But sometimes weird quirks slip in, like some guy in investment banking who hasn’t done a deal in six months getting an outsized bonus. This is always followed by whispered accusations of favoritism.

So here's one stark fact about the world: even if you are a PMD at Goldman, you get paid according to the outcome of a highly politicized debate among the firm's top bosses. You might get a tasty piece of pie, but the size of your cut gets decided behind closed doors.

Although you'll hear that getting named as a partner isn't what it used to be, that's mostly baloney.

"There’s really no equivalent to anything else like a Goldman partnership in the modern business world. It’s almost archaic in the vast elevation of wealth and status it can bring to those who receive it. Some have compared it to the equivalent of getting 'made' by the mafia. But that seriously underestimates what it means to be a Goldman partner. It’s more like being knighted on the battlefield by King Arthur, only this time the battlefield is the global financial market and the Holy Grail is, well, money," I wrote in 2007. And I stand by that.

How do you get named partner at Goldman? Susanne Craig explained it a couple of months ago:

Candidates for partner are vetted by current partners. The review process is known inside Goldman as “cross-ruffing,” a reference to a maneuver in bridge. A few hundred people are typically nominated within the whole company, and the number is eventually whittled down to about 100.

Each department compiles a list of potential candidates, with photos and performance reviews. Partners in another department review it. Candidates are not interviewed, and in many cases are unaware they are even up for partner.

When final decisions are made, it is usually Mr. Blankfein who breaks the good news to the new partners. Few candidates ever find out why they missed the cut.

And Goldman announces only inductees, not those who have been removed. Still, there may be a few telltale signs this year

And, now, here's the list of Goldman's new partners.

Chuck Adams

Nick S Advani

William D Anderson

Scott B Barringer

Gareth W Bater

Tracey E Benford

Avanish R Bhavsar

V Bunty Bohra

Stefan R Bollinger

Robert Boroujerdi

Alison L Bott

Sally A Boyle

Christoph Brand

Torrey J Browder

Philippe L Camu

Donald J Casturo

Chia-Lin Chang

Steven N Cho

David T Y Chou

Thalia Chryssikou

Colin Coleman

Kenneth W Coquillette

Cyril Cottu

Massimo Della Ragione

Michele I Docharty

David P Eisman

Harry Eliades

Christopher Eoyang

Samuel W Finkelstein

Matthew R Gibson

Michele Gill

Michael J Grimaldi

Dylan S Halterlein

Elizabeth M Hammack

Dane E Holmes

Ning Hong

Shin Horle

Stephanie Hui

Eric S Jordan

Vijay M Karnani

Christopher M Keogh

Peter Kimpel

Kelvin Koh

Adam M Korn

David Kostin

Joerg H. Kukies

Andre Laport Ribeiro

Geoffrey Lee

Laurent Lellouche

Eugene H Leouzon

Wayne M Leslie

John R. Levene

Leland Lim

Lindsay P LoBue

David B Ludwig

Raghav Maliah

Matthew F Mallgrave

Alain Marcus

Robert A. Mass

Matthew B. McClure

Patrick S McClymont

Dermot W McDonogh

Richard P McNeil

Avinash Mehrotra

Jonathan M Meltzer

Bruce H Mendelsohn

Peeyush Misra

Bryan P Mix

Atosa Moini

Ricardo Mora

Ezra V. Nahum

Nigel M. O’Sullivan

Nirubhan Pathmanabhan

Jonathan M. Penkin

Michelle H. Pinggera

Dhruv Piplani

Dina H. Powell

Sumit Rajpal

Ganesh Ramani

James H. Reynolds

Stuart Riley

Karl J. Robijns

Craig Russell

Luke A. Sarsfield III

Stephen B. Scobie

John C. Shaffer

Konstantin A. Shakhnovich

Daniel M. Shefter

Michael L. Simpson

Mark R. Sorrell

J. Richard Suth

Jasper Tans

Patrick Tassin de Nonneville

Megan M. Taylor

Teresa Teague

Pawan Tewari

Klaus B. Toft

Kenro Tsutsumi

Richard Tufft

Toshihiko Umetani

Jonathan R. Vanica

Philip J. Venables

Simone Verri

Daniel Wainstein

Kevin A. Walker

Robert P. Wall

David D. Wildermuth

Chang-Po Yang

Alan Zhang

Xing Zhang

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