Goldman Sachs (GS) is being sued by an institutional investor over the firm’s upcoming record-setting 2009 compensation payouts, estimated to be in excess of $22 billion.
The lawsuit, brought in New York State Supreme Court by the Security Police and Fire Professionals of America Retirement Fund, accuses the firm’s planned compensation payouts this year as excessive and improper.
According to the complaint, Goldman Sachs, Wall Street’s dominant firm, ‘blindly’ rewards its board of directors “for corporate performance that has absolutely nothing to do with the skill of the company’s employees.”
The lawsuit also claims that Goldman’s total payouts are a direct result of taxpayer support and therefore without merit because the bank distributes half of its reported annual net revenue to employees regardless of their performance. The payouts this year would be a result of “a trillion-dollar investment made by the American taxpayers that was meant to stabilize the financial industry” and “not based on the hard work of the executives,” the complaint said.
Chief executive Lloyd Blankfein and COO Gary Cohn, who are among the board members names as defendants, are accused of failing to administer the co.’s compensation plans in the best interests of the firm and its shareholders.
The lawsuit seeks to recover “billions in compensation” that Goldman has paid or plans to pay employees.
Goldman rejected the pension fund’s allegations – represented by shareholder and corporate governance law firm Grant & Eisenhofer – saying, “the suit is entirely without merit.”
It is still unclear if other investors will join the lawsuit and create a class action.
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