A Wave of Partner Retirements at Goldman Sachs
The cost-cutting at Goldman Sachs is now reaching the top ranks of the firm.
An unusually high number of partner retirements have been announced internally at the Wall Street bank in recent weeks, according to people who were briefed on the matter but are not authorized to speak on the record. More than a dozen partners have announced plans to leave recently, a much higher number than in the same period in past years.
The executives leaving include some well-known names on Wall Street, like Kevin Kennedy and Jeff Resnick. Mr. Kennedy is a member of the firm’s executive committee and recently ran its Latin American operations. Mr. Resnick is head of commodity trading.
On Wall Street, becoming a partner at Goldman has long been considered the equivalent of winning the lottery. Of the firm’s approximately 28,000 employees, only a small percentage will reach this level. Those who make it into this exclusive club are typically the biggest producers and, with only 100 or so new partners named every two years, it is a sought-after title. Prospective partners are vetted for months. Even as the public resentment of Wall Street and Goldman has increased, the partnership has remained an important part of Goldman’s culture.
To ensure that the partnership retains its cachet and remains as lucrative as in years past, there is annual winnowing of partnerships.
But this year, cost-cutting is taking a greater toll than usual on the partnership. In recent months, as revenue at Goldman has dipped after weak trading volumes, the firm has been slashing costs anywhere it can. It has successfully wrung out more than $1 billion in noncompensation costs from its operations, and it has also laid people off. Partners are typically the highest-paid employees at the firm, so reducing the number of partners will result in significant cost savings.
Adding to the pressure on the partnership is the fact Goldman itself is shrinking. Over the last year the firm has laid off more than 1,000 employees as part of the cost-cutting drive and its total head count at the end of September was down 1,200 from the year-ago period.
Goldman has 34,000 staff members, according to regulatory filings. But this number includes several thousand consultants and temporary workers. The firm does not release how many actual employees it has, but the number is closer to 28,000, according to a person briefed on the matter who was not authorized to speak on the record.
The committee that oversees the partnership process tries to keep the percentage of partners to employees at 1.8 percent, according to people with knowledge of the process. So as Goldman shrinks, it is likely to shrink the size of the partnership pool.
The pool was already at a high level before it started to shrink this year. A year ago, Goldman named 110 new partners, one of the biggest single appointment rounds in its history. That took the size of the partner class to 475.
While it has shrunk over the last year, the pool will need to get even smaller before the firm names another class of partners, which is expected to happen in the fall of 2012. Some of the recent departures are not unexpected. Mr. Kennedy has been at the firm for 38 years; his resignation did not take many Goldman insiders by surprise.
In addition to Mr. Kennedy and Mr. Resnick, at least a dozen other partners have recently decided to leave Goldman, including Leslie Biddle, chief financial officer of the firm’s mining investing effort in commodities; Charlotte Ransom, co-head of the European fixed-income currency and commodities and equities structuring group; and Blake Mather, who manages bank loan sales.
Yusuf Alireza, co-president of Goldman Asia-Pacific, and Rob Gheewalla, head of the principal debt group in Europe, are also leaving the firm, as are Paul Bernard, co-head of Asia Pacific research; Gregg Gonsalves, head of real estate mergers and acquisitions; David Torrible, head of One Delta sales for the Asia Pacific region excluding Japan; Martin Devenish, head of equities in Europe and in Middle East growth markets; and Joseph Gleberman, a senior partner in the merchant banking division.
Buckley Ratchford, who runs the firm’s global bank loan trading and distressed investing, has also announced his intentions to leave. He is is the executive who received an unusual 15 minutes of fame last year after he accidentally left his Goldman Sachs-embossed MasterCard in a restaurant in TriBeCa and was lampooned on Stephen Colbert’s show.
Of the group leaving, only Mr. Kennedy was a partner in 1999 when the firm went public. In 1999, there were 221 partners and each reaped a windfall when the company began trading publicly.