US - Two US pension funds who sued Goldman Sachs last month over allegedly excessive bonus packages have asked the court to schedule an expedited hearing on their request to block the payments.
The motions were filed yesterday by the Central Laborers' Pension Fund and the Security Police and Fire Professionals of America Retirement Fund, as the bank is expected to announce the final bonuses to its employees in the coming weeks.
The original filing alleged the bank's impending 2009 compensation payouts, estimated to be in excess of US$22bn, are a breach of the board of directors' fiduciary duty. (Global Pensions; December 15, 2009)
The suit accuses Goldman's board of following "a pre-set policy that sets compensation at nearly 50% of the firm's revenues without regard to the source of the revenues, the employees' performance, or the best interests of the corporation or its shareholders".
A Goldman Sachs spokesperson said: "This suit is completely without merit."
The plaintiffs said Goldman's payouts are based on a trillion dollar investment made by the American taxpayers that was meant to stabilize the financial industry.
Law firm Grant & Eisenhofer, who represents the plaintiffs, said in a statement: "Goldman's board defends its policy by touting it is guided by a ‘pay for performance' philosophy.
"However, the majority of Goldman's reported earnings for 2009 was not built on the successes and achievements of the company's employees. Instead, no less than 67% of Goldman's 2009 revenues were directly attributable to federal government intervention, including a $13bn payment from AIG to Goldman which was a direct result of Troubled Asset Relief Program (TARP) funds."
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