US pension fund adds to exec comp lawsuits against Goldman Sachs

Lawsuit alleges corporate waste over Goldman compensation pool.

A US labour union pension fund has reportedly filed a lawsuit against Goldman Sachs, the US investment bank, over claims of excessive executive pay. The Philadelphia-based International Brotherhood of Electrical Workers Local 98 Pension Fund has lodged the writ at Delaware Chancery Court, according to Thomson Reuters. It aims to stop Goldman Sachs from allocating just under half of its 2009 net revenue as pay, as recently announced by the bank. The fund claims the payments will vastly overcompensate Goldman’s management and constitute “corporate waste”. The fund reportedly said in the lawsuit, which seeks to recover cash on behalf of shareholders: “Goldman’s management is paid this enormous allocation of profits even though, historically, its performance has not been due to skill superior to even the average hedge fund advisor.” Goldman Sachs said the suit was “without merit”.The writ is the latest legal salvo by a US pension fund against Goldman Sachs and mirrors similar legal tussles between institutional shareholders and Morgan Stanley. Goldman faces a suit filed in January in Delaware by the Southeastern Pennsylvania Transportation Authority as well as another case initiated by the Central Laborers’ Pension Fund filed in the Supreme Court of New York. The latter argues that Goldman continued to pay big bonuses despite receiving government support during the financial crisis.
In February the Security Police and Fire Professionals of America Retirement Fund and the Central Laborers’ Pension fund filed suit against Morgan Stanley over alleged excessive staff pay.
Goldman Sachs’ compensation pool for 2009 has been set at $16.2bn, a 36% compensation ratio.