Shareholding nuns put Goldmans on the run over bonus culture
Tuesday 05 April 2011
Four orders of nuns are demanding that Goldman Sachs overhauls its pay for top executives, in the teeth of public fury over excessive bonuses and after it was revealed that Lloyd Blankfein, the investment bank's chief executive, took home $19m (£11.7m) last year.
The nuns are among a number of religious groups and individuals pushing the issue at the company's forthcoming shareholder meeting. Protesters, including the Rev Jesse Jackson, attended last year's meeting to demand that Goldman learn the lessons of the financial crisis. According to the groups, Goldman must address the widespread perception that it pays "extremely excessive" compensation to its executives and that the work done by bankers on Wall Street does not justify such large pay packages.
The orders of nuns are the Sisters of Saint Joseph of Boston, the Sisters of Notre Dame de Namur, the Sisters of St Francis of Philadelphia Benedictine and the Sisters of Mount Angel.
The resolution is being led by the Nathan Cummings Foundation, named after the founder of the Sara Lee food company and aimed at promoting Jewish values including social justice.
A similar motion last year, arguing that Goldman should examine and address pay disparities across its firm and across the industry, failed to win shareholder support. This time, the pitch to fellow shareholders is being made, not based on saving executives' souls, but rather on saving shareholders' money and reducing the risks from the public outcry over pay.
"Following the near implosion of the financial markets in 2008, Wall Street in general – and Goldman Sachs in particular – became the focus of public ire over what many see as excessive executive compensation schemes," the groups said.
"Outrage over the financial crisis, coupled with the perception that Wall Street executives' performances have not justified their pay, led to legislative efforts aimed at curbing pay, compensation-related shareholder lawsuits and a tremendous amount of negative press."
The resolution calls on Goldman to produce a report that either justifies pay practices or sets out ways to bring pay down. The bank, though, told shareholders that the report would be a "distraction", and the bank's compensation scheme for executives is well-designed "to attract, retain and motivate the talented people required to operate a large, dynamic, global business".
The top five executives at Goldman received $70m last year.
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