Goldman Sachs to be sued for ‘overcompensation’ of staff by pension fund

10 March 2010

A group of shareholders has launched a law suit against Goldman Sachs accusing the investment bank of paying management and senior executives too much.

Legal action has been filed at Delaware Chancery Court by pensions fund the International Brotherhood of Electric Workers, Reuters reported.

The group described the bank’s decisions to set aside up to 47 per cent of the bank’s revenue for pay as “vastly overcompensat[ing] management and constitut[ing] corporate waste”.

However, Ed Canaday, a spokesman for Goldman Sachs, told the news provider: "We believe the lawsuit is completely without merit."

The law suit calls for the bank’s charitable donations, which are thought to be being made to apologise for its actions, to come from management and bosses rather than the institution itself.

Recently the bank’s board rejected an appeal from shareholders to investigate excessive payments to staff, a filing to the Securities and Exchange Commission revealed.

The filing also outlined how negative publicity is now a growing concern for the bank due to the impact it can have on staff morale and damage to the institution's reputation.

Lloyd Blankfein, the investment bank’s chief executive officer, is thought to have only received a $9 million bonus as a result of worries over the bank’s perception by the public.

By Jim Ottewill

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