By LIZ RAPPAPORT And TOM MCGINTY
Goldman Sachs Group Inc. will tap the smallest number of executives in more than a decade to join its highly coveted partnership ranks, showing that the securities firm is paring down all the way to the top.
The New York company is expected to announce this week the promotion of about 70 employees to partner, said people familiar with the situation. The likely total is roughly one-third smaller than the 110 employees named partner by Goldman in 2010.
People involved in the process say this year's crop of partners probably will be the smallest since before Goldman went public in 1999. The title is one of the most sought-after on Wall Street, with Goldman picking new partners every two years on even-numbered years.
Usually, Goldman Chairman and Chief Executive Lloyd C. Blankfein and President Gary D. Cohn call to congratulate partners early in the morning, and the company puts out a memo later that day. Employees who make partner get a chunk of the firm's profits, more power in important decision-making and a shot at climbing higher up the ladder at Goldman.
The addition of new partners will increase the firm's total to roughly 450, people familiar with the matter said. As of Sept. 30, Goldman had 32,600 employees, including temporary workers. Executives try to keep the size of its partnership at 1.5% to 2% of the company's "full-time" staff, a number it doesn't publicly disclose. Goldman partners typically stay five to eight years after attaining the title, these people said, but it isn't seen as a lifetime appointment.
The unusually small number of new Goldman partners reflects a push by the firm's partnership committee, led by Vice Chairman Michael S. Sherwood, to shrink its overall partner count as the firm slogs through a prolonged slump in trading and investment banking, both traditional engines of the firm's profits.
Like many other banks and securities firms, Goldman is cutting costs and shedding employees. At the same time, the company also is undergoing a generational shift just below the 11-person group of executive officers that includes Messrs. Blankfein and Cohn.
Several partners in businesses such as proprietary trading and private equity left after they were reined in by new regulations that limit risk-taking, while a group of younger partners is pushing to climb higher up the ladder.
"The talents we are looking for in a partner include the right combination of commercial success, leadership and values," said Mr. Sherwood, who also is co-CEO of Goldman's international operations. "We need a diverse range of people to run our businesses, and we put a great effort into choosing each new class."
As of Monday, the Goldman partnership committee hadn't finished the list of new partners, said people familiar with the matter.
Partners make a base salary of $900,000 a year. Partnership profits come in the form of bonuses paid mostly as Goldman stock.
Goldman's partnership ranks peaked at 480 in early 2011, partly because some partners were asked to stay and help the firm through the financial crisis. Some partners were reluctant to leave because there were fewer opportunities elsewhere and Goldman's reputation was suffering.
Since then, executives have taken steps to revamp Goldman's business practices and varnish its brand.
Meanwhile, Mr. Blankfein and other top executives encouraged some partners to leave. The nudge was aimed at making sure the partnership ranks remain dynamic and an "aspiration," people familiar with the matter said.
Pressure is growing inside Goldman to see younger partners move up. Mr. Blankfein, who is 58 years old and became a Goldman partner in 1988, has indicated he wants to stay on as CEO, but Mr. Cohn has said he would like to eventually succeed Mr. Blankfein. Mr. Cohn became a Goldman partner in 1994.
Many Goldman executives saw the recent promotion of Harvey M. Schwartz to finance chief as a needed injection of new blood. Mr. Schwartz, 48 years old, will replace longtime Chief Financial Officer David A. Viniar.
"It's all very appropriate," said Mr. Blankfein in an interview earlier this year. "If no one left, it would get pretty crowded at the top. You may have slightly fewer people overall, but the people you do have are very important."
About a decade ago, Mr. Blankfein said in the interview, he thought Goldman would have more than 60,000 employees by now, filling the company's headquarters in lower Manhattan and spilling into a skyscraper across the Hudson River in Jersey City, N.J.
But the firm has grown far less than he predicted, partly as technology displaced thousands of equities traders. Goldman recently moved some employees back to its headquarters from Jersey City.
Goldman's partnership has gradually changed to reflect its presence in other parts of the world. Since 2004, Goldman partners with non-U.S. citizenship grew to 43% from 30%. In 2010, more new Goldman partners were based in Asia and other non-U.S. markets than in previous years, said people familiar with the matter.
Corrections & Amplifications
A previous version of this article said Gary Cohn is 48 years old. He is 52 years old.