Brokerage firm Goldman Sachs (GS) has started meeting its major investors in an attempt to stop criticism over its record compensation, the Wall Street Journal reported. Think this is a bit of overkill? Not when the average GS employee is set to earn $700,000 this year (how do I sign up for that gig?). These meetings are the first of their kind and are expected to continue for several more weeks. The Wall Street firm is defending its pay, especially in the wake of the economic crisis that some contend it partially behind. GS is trying to win support for its compensation packages, which is why the company is going to the shareholders. These investors are the actual owners of the firm and hold the power to change the company's compensation structure. Of course, employees and executives are hoping there would be no change, and the campaigning is heavy.
According to The Journal's report, some investors are saying that GS is developing a strategy to navigate any shareholder proposals that would limit pay. The proposals will likely be voted on this spring. Of the five shareholder proposals submitted to GS, three are related to compensation. This, for some reason, has surprised GS since shareholder feedback has been "very supportive," company spokesperson Lucan van Praag noted.
I would bet that the opinion on Main Street wouldn't be nearly as supportive. But I do have to admit that it is nice to know that GS is discussing its compensation packages with its shareholders, and that there is some recourse for the shareholders in the form of voting.
Let's not forget, though, that the skeptics point out that the GS shareholders voting on the compensation packages are themselves rather wealthy and higher-ups in other companies, so their incentives may be marred by personal considerations.
But as a representative from TIAA-CREF -- which holds roughly $1 billion in GS shares -- noted, the meetings "are a constructive first step, and the next logical action would be for Goldman to proactively consider putting its compensation policies to a vote of shareholders. If Goldman Sachs acts the rest of Wall Street will likely follow."
If you held the power to vote on a compensation package for a company, a package that could eventually impact your own pay, what would you do?
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Reader Comments (Page 1 of 1)
12-03-2009 @ 11:16AM
druid0621 said...
Sure, these big shots bring in a lot of revenue - but that's part of the problem. GS and others charge way too much for their services, and then compound the problem with huge bonuses. All of these costs drive up consumer prices, and should be investigated and regulated. I'm not much for federal regulation, but when companies cannot do it themselves, someone else has to act like an adult.