David Solomon is cleaning house atop Goldman Sachs.
At least a dozen partners are in negotiations to leave the firm in coming weeks, according to a person with knowledge of the situation.
The move comes as Solomon, nearing his one-year anniversary as CEO of Goldman Sachs, is pushing ahead on an internal review of the firm’s businesses. That process, which requires executives to commit to hitting financial targets embedded in multi-year plans, ignited a shake up among the bank’s long-time managers, said the person.
Partners sit atop the hierarchy at Goldman Sachs, the only bank among the biggest U.S. firms to still use the term. It’s a throwback to when Goldman was a private partnership, meaning that partners committed their own money and reaped a percentage of the bank’s profits.
Even though that arrangement ended with the bank’s 1999 IPO, partners are still the best-paid at Goldman: They make at least $1 million in annual compensation, and often several times that much. They also have access to investment vehicles off-limits to other employees and attend exclusive networking events.
The group of about 450 partners has swollen in recent years, and Solomon’s moves are seen as making the title more exclusive. It also will trim costs as the bank undertakes several expensive initiatives, including a push into consumer lending and wealth management for the masses.
Most or all of the partners leaving achieved that rank under one of Solomon’s predecessors. As he continues to build out new businesses, the departures will open up slots for fresh blood in key roles, cementing loyalty to Solomon among managers and providing incentive to a new generation of bankers.
It’s just the latest move Solomon has undertaken to put his stamp on the organization: Last year he named Stephen Scherr as his CFO and John Waldron as president, setting off a cascade of changes.
Among those considering stepping down are Elisha Weisel, the bank’s chief information officer, and Steven Strongin, head of research, according to the Wall Street Journal, which first reported the partner exodus. All told, as many as 15% of the bank’s partners will depart this year, according to the Journal.
The bank first revealed it was undertaking a front-to-back review in October, shortly after Solomon formally took over as CEO.
The need was clear: Goldman has lagged rivals like J.P. Morgan Chase in share performance because of its reliance on revenue from trading and other Wall Street activities. The objective of the review, according to Scherr, is to boost shareholder returns, he said.
But the project has taken longer than expected. While the bank was supposed to update investors on the review earlier this year, in April the bank said it would reveal the plan in the first quarter of 2020.