A sizable union pension fund sued Goldman Sachs Group Inc (GS.N) on Monday on the grounds that the investment bank is overcompensating its executives. Last week, Goldman submitted a filing with the Securities and Exchange Commission, announcing that shareholder concerns of this kind would not be address by the board.
The International Brotherhood of Electric Workers fund filed the lawsuit in a Delaware court in an effort to recoup funds on behalf of shareholders they felt were lost on executive compensation. Goldman allocated close to 50 percent of is net revenue last year to bonuses. According to the law suit this constitutes as "vastly overcompensat(ing) management and constitute corporate waste."
Additionally the suit asks that Goldman Chief Executive, Lloyd Blankfein other top executives, instead of shareholders, pay out the charitable donations on a personal, rather than company wide level.
Goldman has taken a good deal of heat on Wall Street for overcompensation, particularly after Blankfein took to the streets campaigning for their rights to compensation. The CEO became something of the poster boy for what was wrong with bonuses and has been working to publicly atone ever since. Last week, the company announced it would cap 2009 compensation at $16.2 billion, a 36 percent compensation ratio on a record profit.
In response to the suit, Goldman spokesman Ed Canaday said: "We believe the lawsuit is completely without merit." A lawyer for the plaintiff did not immediately return a call seeking comment.
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