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A Revolution Occurring?
An investor in the US, Southeastern Pennsylvania Transportation Authority, is looking to sue Goldman Sachs over their employee compensation schemes which rewards employees at shareholders expense. Goldman Sachs, the fifth-biggest US bank by assets, has lost US$50 billion in market value since 1999 while the company has paid out billions in compensation to the firm’s 31,000 employees. The lawyers remarked how “Goldman officials received billions in pay and bonuses last year while the firm settled claims by the U.S. Securities and Exchange Commission that executives misled investors in collateralized debt obligations linked to subprime mortgages”.
According to Bloomberg, Goldman’s set a Wall Street pay record in 2007, and was subsequently “pilloried by politicians and labor unions for its compensation practices after getting taxpayer aid during the financial crisis”.
It is hard to imagine how employees of banks who have lost billions in capital for their owners and sent the world to the brink of disaster forcing governments to bail out these banks for their misdeeds have been eligible for “bonus” payments. I can’t see how they keep their job yet alone the former.
However, is this a sign that maybe people are starting to have enough?
I have long believed that fund managers or mutual funds in the US have taken a way to passive role in the governance of senior management. They effectively let them get away with whatever they want surely part of the fund managers duty is to scrutinise the reasonableness of staff remuneration the same way they would if THEY owned the business. Clients in fund managers are paying fees and the fund managers should be earning those fees on the governance side by holding senior management to account if actions are not in share holders interests.
According to Bloomberg, Goldman’s set a Wall Street pay record in 2007, and was subsequently “pilloried by politicians and labor unions for its compensation practices after getting taxpayer aid during the financial crisis”.
It is hard to imagine how employees of banks who have lost billions in capital for their owners and sent the world to the brink of disaster forcing governments to bail out these banks for their misdeeds have been eligible for “bonus” payments. I can’t see how they keep their job yet alone the former.
However, is this a sign that maybe people are starting to have enough?
I have long believed that fund managers or mutual funds in the US have taken a way to passive role in the governance of senior management. They effectively let them get away with whatever they want surely part of the fund managers duty is to scrutinise the reasonableness of staff remuneration the same way they would if THEY owned the business. Clients in fund managers are paying fees and the fund managers should be earning those fees on the governance side by holding senior management to account if actions are not in share holders interests.
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