On the eve of Goldman Sach's earnings announcement and anticipated move to set aside up to $20 million in executive bonuses, two nonprofit activist groups have filed a shareholder resolution urging the firm to review company pay disparities.
Because the bonuses are coming so quickly on the heels of the federal bailout money given to the company last year, the Nathan Cummings Foundation and the Benedictine Sisters of Mt. Angel, Oregon, announced today that they have filed a shareholder resolution urging Goldman's board to review pay disparity at the company and analyze the appropriateness of its spiraling pay packages--packages that impact Wall Street compensation in general, the groups say.
The resolution, which is expected to gather more co-sponsors, has been filed early to challenge Goldman Sachs as the board makes final decisions on bonuses. It was filed to appear in the 2010 proxy and be voted on at the stockholder's meeting next year. Other investors may also file resolutions calling for a "say on pay" or for separation of board chair and CEO positions at Goldman Sachs.
Laura Shaffer, who is director of shareholder activities of the Nathan Cummings Foundation and one of the resolution's sponsors, stated: "This request is especially timely as Goldman Sachs rushes to pay huge bonuses, setting an example that many Wall Street firms will no doubt strive to emulate. As shareholders, the ripple effects of this extraordinary compensation are especially concerning. Executive compensation accounts for a considerable portion of aggregate earnings and as firms like Goldman hand over ever larger sums to their executives, these spiraling pay packages will have increasingly significant impacts on investors' returns."
Judy Byron, who coordinates the faith-based Northwest Coalition for Responsible
Investment and is a longtime proponent of this resolution, said: "Goldman
Sachs' announcement of record bonuses is a stark reminder about how executive
compensation is spiraling out of control for many firms. It is important that
citizens and shareowners both act as voices of reason. As Fortune reminded
us in 2007, top executives earn 364 times the pay of the average worker. CEO
pay increases significantly for many executives even in rough times, while
layoffs skyrocket and pay for average employees stagnate."
Goldman Sachs is "poised to become the poster child of the company that drives income disparity in the United States," says Laura Berry, executive director of the Interfaith Council on Corporate Responsibility.