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The Security Police and Fire Professionals of America Retirement Fund has filed a lawsuit with the New York Supreme Court, naming Goldman Sachs Group Inc. (GS), CEO Lloyd Blankfein, and the company's board of directors as defendants. The company's crime? Planning to pay $22 billion in bonuses "for corporate performance that has absolutely nothing to do with the skill of the company's employees." Goldman spokesman Lucas van Praag told Reuters that the lawsuit is without merit.
The lawsuit seeks to recover billions of dollars in bonuses for the benefit of the company's shareholders, and accuses the company of excessive risk-taking and short-termism.
What will this lawsuit lead to? Absolutely nothing.
The problem is that, even if the retirement fund is justified in its criticism, setting bonuses falls well within the range of the company's (for better or for worse) duly elected board of directors and the senior executives who report to the board. There is ample precedent to show that issues of business judgment at public companies cannot be successfully litigated by disgruntled shareholders. The lawsuit alleges that the board of directors breached its fiduciary duty by failing to administer an executive compensation plan in the best interests of shareholders. But if that were something you could litigate, 90% of public companies in America would be in court.
The lawsuit is pretty clearly a publicity stunt and a means of voicing displeasure. But if I were a constituent of the retirement plan, I'd be upset that my money and fund managers' time was being wasted on something so frivolous that has no chance of succeeding.
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Reader Comments (Page 1 of 1)
12-15-2009 @ 7:37PM
Uri said...
The system is broken if the owners of a company have to sue to keep their employees from giving away their money, assuming that most shareholders share their opinion that is.
What's to stop GS board of directors from giving away so much stock that they become the dominant shareholders?
12-15-2009 @ 9:50PM
Allen said...
The basic problem with Goldman is its CEO, Lloyd Blankfein, the sniveling little cocksucker who claims that he is "doing God's work" while he is stealing billions of dollars from his own company, its shareholders and the American taxpayers. His gross incompetence should have resulted in the demise of Goldman, but Hank Paulsen, then Sec of Treasury, was a Goldman officer who saved Blankfein's bacon from the fire by giving him taxpayer money, directly and through AIG.
12-16-2009 @ 8:48AM
Mitch said...
I've asked my mutual fund manager to identify any of my funds, that are tied in any way to Goldman-Sachs, AIG, BOA, Stearns, Freddie and Fannie, with the intent of ridding my portfolio of any ties to those companies altogether . I do not beleive poor performance should ever be rewarded, and want to ensure its clear to my fund manager that I will not tolerate or support any such companies with my investments.
Haven't head a thing yet......
12-16-2009 @ 1:57PM
Louise said...
YOU CAN'T GET YOUR BONUS, THE BOYS IN WASHINGTON GOT IT. AND THEY DON'T PAY BACK. THESE COMPANYS ARE IN WITH OBAMA AND WASHINGTON BOYS TO TAKE OVER COUNTRY. BEFORE LONG WE WILL BE LIKE CHINA. ONE LEADER AND JUST ADVISORS. YOU WILL WORK FOR NOTHING, OWN NOTHING, AND SAY NOTHING. THIS IS OBAMAS WAY. NO FREEDOM, NO RIGHTS, NO SAY. WAKE UP FOLKS ,VOTE INDEPENDANT.
12-17-2009 @ 12:37PM
ann said...
Many lawyers are exploiting flaws in our legal system in search of jackpot justice! Stop these frivolous lawsuits. The U.S. Chamber is determined to change this. Show support on their Fan Page http://www.facebook.com/uschamber?ref=ts
12-20-2009 @ 6:03PM
Allen said...
In response to Ann, the lawyers in the present instance are the "good guys" - their litigation against criminal entities such as AIG and Goldman Sachs are for the benefit of the victimes of those companies and their corrupt leaders, such as Lloyd Blankfein (Goldman) and Martie Sullivam (disgraced AIG ex-CEO - an illiterate high-school dropout - really!). If they are bankrupted by the litigation against them - Bravo!