The heat is on at Goldman Sachs.
Hundreds of mid-level bankers at the gold-plated Wall Street firm will be sweating out the next few days, wondering if they will make the cut next week and be named a managing director.
The promotion, one step below becoming a partner, is worth millions of dollars of added income over several years.
But not getting named a managing director, or MD, could spell the end of a promising Goldman career.
It’s one of the more excruciatingly tense weeks at Goldman — and this year the pressure is ratcheted higher than ever because it is the last annual set of MD promotions.
CEO Lloyd Blankfein and the rest of the management team decided last year to make future MD promotions every two years.
The change comes as Goldman has been paring its staff and its elite partners in the aftermath of the financial crisis that pushed even the storied franchise to the brink.
“This is symptomatic of what’s happening on Wall Street now,” said Brad Hintz, a prominent financial analyst at Sanford Bernstein.
Like other Wall Street firms, Goldman is finding ways to separate the wheat from the chaff as tougher regulations and volatile markets have forced the 144-year-old firm to cull its partner ranks as well as its more mid-tier staffers to cut costs, according to Hintz.
“The street is adjusting. And this is the bad part if you happen to be one of those people who is mid-career and you’ve just been told you’re not making managing director,” Hintz said.
Overall, Goldman’s revenue is expected to fall this year, to about $33 billion, from $34.2 billion last year. In 2009, revenue stood at $45.2 billion.
Meanwhile, bond-trading revenue has plunged, and the amount of money the bank sets aside for compensation was down by 35 percent.
Sometimes waiting a decade or more to make MD, bankers who make the grade could see their base salaries top $500,000 (with bonuses lifting their salaries into the seven-figure territory).
MDs also become eligible for partnership, which has traditionally been a biannual selection process.
Last year, Goldman tapped 266 lucky MDs from its ranks, but that figure could be higher this year.
It’s possible the bank will promote slightly more employees than in years past to compensate for the beginning of its biannual process, a source said.
“It won’t be two times [the number of MDs],” said one insider, putting extra pressure on those not named.
“The idea is for [bosses involved in the selection process] to be more deliberate about promoting people,” the insider said.
That selection process may be bad news for some bankers, who may choose to leave the firm if they aren’t picked and aren’t willing to wait another two years for their next chance
“Hearing that you’ve not been promoted — for some, it’s like the Grinch who stole Christmas,” the source said.
The MD list is expected to be released early next week.