Goldman Sachs Partners Are Pulling Back -- WSJ
July 21 2017 - 3:02AM
Dow Jones News
By Liz Hoffman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 21, 2017).
Goldman Sachs Group Inc. became a public company 18 years ago.
It is starting to look more like one.
Goldman's 450 or so partners own just 4.8% of the firm today,
according to a securities filing late Wednesday. That is the lowest
level since its initial public offering and slips under a 5%
regulatory threshold that for years has mandated public disclosures
that opened a window into the sway held by this elite inner
circle.
Going forward, Goldman won't have to disclose its partners'
stakes, or their buying and selling of the bank's shares, unless
the group's collective stake jumps back over 5%.
That would shield from public view when partners unload their
shares en masse, which happened last winter as Goldman stock
touched new highs.
The filings are the last outward vestige of the old private
partnership that once ruled Goldman. The document itself is
defiantly old-school, using a stripped-down format abandoned by
most companies for Securities and Exchange Commission
submissions.
The private-partnership era, which stretched from Goldman's 1869
founding to its 1999 IPO, once meant that access to its upper
echelons meant tying one's personal fortunes to the firm's
capital.
Still, the ritual of selecting partners every two years has
remained a vital part of the firm's identity, a way to reward and
motivate its most promising employees and help guard the firm's
culture as Wall Street changes around it.
Partner slots carry minimum salaries of about $1 million and
bonuses that can be multiples of that. Partners also get access to
invest in firm deals and other perks.
Goldman's IPO made its partners much more wealthy. But it also
set in motion a slow-motion transformation of the firm. With more
than 95% of its shares held by outside investors, Goldman is now,
more than ever, a public company.
That lesson was hammered home this week, when Goldman faced
tough questions from analysts about whether it has moved quickly
enough to address weakness in its core trading business. The firm
posted steep declines in fixed-income trading that sparked a 2.6%
drop in shares.
Analysts are also pressuring Goldman on its signature secrecy, a
privilege afforded to private partnerships but not public
companies.
On its earnings conference call Tuesday, one analyst questioned
why Goldman doesn't, as peers do, tell investors what they can
expect in dividends and share repurchases.
"Analysts and investors are grown up enough" to understand that
forecasts might change, the analyst, Autonomous Research's Guy
Moszkowski, told Goldman Chief Financial Officer Martin Chavez. "I
just don't think you're doing yourselves any favors by not telling
us."
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
July 21, 2017 02:47 ET (06:47 GMT)
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