A seat in Goldman Sachs Group Inc.'s partnership was once Wall Street's most coveted prize. The firm's 1999 initial public offering minted one generation of multimillionaires; the trading and buyout boom of the 2000s made another.


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But pay fell after the financial crisis and the partnership swelled. Goldman's partners remain one-percenters, but Wall Street's brass ring has lost its luster.

Chief Executive David Solomon is trying to restore it. Goldman's new class of partners, to be promoted next month, is likely to be its smallest since the mid-1990s, according to people familiar with the matter. And for those who make the cut, the Wall Street firm is dangling a new financial carrot: access to profits from its private investment funds.

Partners will receive carried interest—a slice of future profits, taxed at low rates—in four of Goldman's private investment funds starting this year, people familiar with the plans said. The firm will lend partners up to half a million dollars to increase their personal investment.

Carried interest is a huge moneymaker for executives at private-equity firms like Blackstone Group Inc. It is also a perennial political lightning rod because of its tax advantages, but has been so far protected by Republican majorities in Congress.

Goldman's private funds were already open to partners on terms similar to outside investors. But carried interest is new and far more lucrative if the funds in question—which include a corporate-buyouts fund and another that buys stakes in hedge funds and other investment managers—hit minimum profit thresholds.

Buy-in from its partners could also add momentum to Goldman's efforts to raise $100 billion in new funds across private equity, credit and real estate by 2025.

Tending to one of Wall Street's most elite clubs is hardly a serious problem these days. But Goldman's success always has been wrapped up in its reputation as a wealth-creation machine, drumming up deals for the financial benefit of its executives as well as its clients. (Today's crop of partners lament having missed out on a wildly profitable investment in the Industrial and Commercial Bank of China that was offered to Goldman partners in 2006.)

Pay has fallen all across Wall Street since the 2008 financial crisis as a concession to regulators and shareholders. Goldman paid its employees 35% of the firm's revenue last year, down from 42% in 2011.

Partners are guaranteed salaries of about $1 million, but much of their bonuses are in Goldman shares that haven't budged since 2015. Meanwhile, the partnership swelled from about 220 when the firm went public to more than 500 at its peak, in part thanks to a round of postcrisis virtue-signaling that elevated executives in risk and compliance.

When Goldman's No. 2 executive, John Waldron, faced pointed questions from partners at a February off-site about declining pay, he told them the firm was working on some new ideas—and reminded them of existing perks like top-notch health insurance, attendees said.

This year's partner selection got under way last month with a clear mandate to keep the list tight, according to executives familiar with the process. The 2020 class likely won't top 60, those executives said, the fewest in two decades, though last-minute jockeying often adds a few names to the list.

Goldman named 114 partners in 2000, replacing those who retired with their IPO profits, and a record 115 partners during the 2006 trading boom. Sixty-nine were promoted two years ago in the first class under Mr. Solomon.

After an uptick in retirements and a few cases of "de-partnering," where executives are quietly stripped of the title but stay at the firm, the partnership will likely shrink to its smallest in years.

Write to Liz Hoffman at liz.hoffman@wsj.com

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