|Goldman Sachs CEO Lloyd Blankfein’s total 2010 compensation, including salary and bonus, was $14.1 million.|
Religious groups press Goldman Sachs on pay
NEW YORK — When Goldman Sachs Group Inc. executives and shareholders gather this morning for the company’s annual meeting, the room might look a little like a house of worship.
A coalition of religious groups headed by a nun, a priest, and the chief executive of a Jewish organization will be there to press Goldman Sachs Group Inc. to evaluate whether it’s paying executives too much. Goldman chief executive Lloyd Blankfein will have no choice but to listen. The group has won a coveted spot on the annual meeting agenda.
The religious contingent also wants the investment bank to evaluate the pay discrepancy between high-paid workers and those at the bottom. And they’re asking the company to explain something many shareholders want to know: why compensation for Goldman’s top five executives rose to $69.6 million in 2010 even as profits and revenues have declined.
The Nathan Cummings Foundation, which says is rooted in Jewish tradition, along with the Sisters of Saint Joseph of Boston, the Sisters of Notre Dame de Namur, the Sisters of Saint Francis of Philadelphia, and the Benedictine Sisters of Mount Angel, have introduced a shareholder resolution that asks the investment bank to evaluate whether its compensation packages for senior executives are excessive and should be modified. The resolution calls on Goldman to publicly report its findings by Oct. 1.
Sister Nora Nash of the Sisters of Saint Francis says the group’s mission is primarily about getting better returns. Her order of nuns and the other religious groups are long-term shareholders of Goldman; their retirement savings are at stake when outsized pay packages limit dividends or growth. (The groups declined to say how many shares of Goldman they owned, but most are held through investments in various funds.)
“When we see CEOs earning over 300 times more than the typical worker, it raises serious questions for shareholders on whether they are really [that] valuable,’’ says Sister Nash, who has been a nun for 50 years.
Sister Nash will make a presentation at the annual meeting to try to win shareholder support for the resolution. Shareholders can vote on the measure today. Company officials tried to have the proposal removed from the agenda but the Securities and Exchange Commission — which approves such exclusions — rebuffed the effort.
For the last several years, Goldman has been the target of public outrage over its outsize compensation for top executives. That anger was fueled by a record $68 million bonus for Blankfein in 2007, just before the financial crisis began. Last year, Goldman was unsuccessfully sued by some shareholders who said compensation levels were too high at the firm.
“Everybody deserves to be rewarded for their work,’’ said Father Seamus Finn of the Missionary Oblates of Mary Immaculate, who plans to attend the meeting. “But our culture has created the star corporate CEO whose work doesn’t deliver the kind of value warranted by that status.’’
The group says the significant compensation increases given to Goldman executives weren’t merited. The firm’s profits and revenue declined dramatically and it was forced to pay out $550 million to settle an SEC fraud lawsuit. However, Blankfein’s total 2010 compensation, which includes salary and bonus, rose to $14.1 million after falling to just over $1 million in 2009. Overall, the pay of its top five executives in 2010 rose 12 times from the previous year, to $69.6 million. (In contrast, US workers earn an average of $40,790 annually and average hourly earnings fell 1 percent last year, according to government statistics.)
In 2010, the bank’s net income fell 37 percent to $7.71 billion and its revenue slid 13 percent to $39.16 billion. This week, US senators led by Senator Carl Levin, a Michigan Democrat, asked the Justice Department to investigate Goldman and other firms for their role in the financial crisis. Last year, Goldman shelled out the largest penalty ever by a Wall Street firm to settle allegations that the bank had committed fraud.
“The pay issue is even more important when $550 million of shareholder money is used to settle a fraud investigation,’’ said Lance Lindblom, chief executive of the Nathan Cummings Foundation.
In a regulatory filing for shareholders, Goldman says that preparation of such a report would be a distraction for the board of directors and be an “unjustified’’ cost to the firm. The investment bank also argues that documents are already publicly available.