Religious Investors Challenge Goldman Sachs on Excessive Pay
May 10th, 2011
Faith-based investors challenged Wall Street’s most powerful investment bank – Goldman Sachs – as it hosted shareholders at its building in Jersey City. The Goldman Sachs AGM was held outside Manhattan for the first time in history as the investment bank sought to head off anger about the fortunes it pays its top people and its role in the financial crisis.
Members of the Interfaith Center on Corporate Responsibility (ICCR) pressed Goldman Sachs at its Annual General Meeting last week on the sensitive subjects of executive compensation and pay disparity. Goldman CEO Lloyd Blankfein had no choice but to listen.
Religious investors introduced a shareholder resolution that asked the investment bank to evaluate whether its compensation packages for senior executives are excessive and should be modified. The resolution garnered just 4% of the vote, but raised uncomfortable questions for the well-paid executives, and won the attention of the Press.
Furthermore, the bank’s own resolution on how to pay its executives secured only 73 per cent of votes. Father Seamus Finn, who attended with other ICCR representatives, said: “We hope they will take a second look at … [the pay plan] because these votes usually get much higher support.”
The religious contingent wanted to know why compensation for Goldman’s top five executives rose to $69.6 million in 2010 even as profits and revenues have declined. Overpayment in the financial services industry has been criticized most recently in a study from the Council of Institutional Shareholders.
Sister Nora Nash of the Sisters of Saint Francis says the group’s mission is primarily about getting better returns. As long-term shareholders of Goldman the nuns’ retirement savings are at stake when outsized pay packages limit dividends or growth. “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.”
“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.”