NEW YORK, Jan. 25 /PRNewswire/ -- In response to lawsuits filed against Goldman Sachs Group, Inc's board of directors by Goldman shareholders, the Central Laborers' Pension Fund and the Security Police and Fire Professionals of America Retirement Fund, the Company reduced its 2009 bonus pool from a proposed 48 percent to 35.8 percent of the Company's net revenues.
The lawsuits, which were filed last month by Grant & Eisenhofer, a leading shareholder and corporate governance law firm, complained that the board breached its fiduciary obligations to set compensation on a yearly basis based on the facts and circumstances of that year and instead based compensation on blind adherence to a decade old policy.
On January 21, Goldman announced a 2009 bonus pool of $16.2 billion, which is down from a previously estimated payout of $22 billion. Goldman's actions in response to the lawsuits bring the suits to a successful conclusion.
"It is clear that Goldman Sachs' announcement regarding decreased bonuses for 2009 was a reaction to the pressure being brought to bear by our lawsuits and the public outcry over excessive compensation on Wall Street," said Jay Eisenhofer, partner at Grant & Eisenhofer and counsel to the plaintiffs. "We applaud the decision of the board to listen to shareholders and revise the bonus amounts, however we do have serious concerns as to whether the board's actions were merely an aberration or if indeed they reflect a real change in corporate culture."
When Goldman went public in 1999, the board of directors adopted a policy of paying approximately 50 percent of net revenues every year as compensation for employees regardless of whether such an award was justified by the performance of the Company or the efforts of its employees. Since going public, Goldman has paid out 104.9 billion in compensation to its employees. In contrast, Goldman's net earnings during the same period have been only $46.8 billion.
Note: Grant & Eisenhofer P.A. represents institutional investors and shareholders internationally in securities class actions, corporate governance actions and derivative litigation. The firm has recovered more than $12 billion for investors in the last five years, including a $3.2 billion settlement from Tyco International, a $448 million settlement from Global Crossing and a $400 million settlement from Marsh & McLennan. G&E has also been selected among The National Law Journal's "Plaintiffs' Hot List" for the past five years, and is a member of its Hall of Fame. RiskMetrics Group named Grant & Eisenhofer the Number 1 law firm in average shareholder recoveries in securities class actions in 2007 and 2008. For more information, visit www.gelaw.com.
SOURCE Grant & Eisenhofer P.A.