Exclusive: Goldman's God problem goes away, for now

Sat Mar 17, 2012 10:46am EDT
 
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By Jessica Toonkel

NEW YORK (Reuters) - Goldman Sachs Group Inc (GS.N: Quote) scored at least one victory in an otherwise tough week - this one against a coalition of religious groups.

The bank has been in the spotlight since a mid-level executive resigned and fired off a blistering attack on the firm in a New York Times op-ed on March 14, describing a "toxic and destructive" culture motivated by greed.

For the past two years, a group of religious institutions that hold Goldman shares has asked the investment bank to review executive compensation packages and has been successful in getting its proposal taken up at regular shareholders' meetings.

This year, the group, including the Sisters of St. Francis of Philadelphia, again sought to have its proposal voted on by shareholders. But for the first time, the U.S. Securities and Exchange Commission sided with Goldman, which argued it had already complied with the request.

The SEC's letter of rejection was emailed to the religious groups' leaders on Thursday, the day after the former Goldman executive, Greg Smith, published his scathing op-ed piece in the Times.

An official at the Nathan Cummings Foundation, a Jewish group that is the lead filer of the proposal, said she was somewhat surprised that the agency rejected its request given that the op-ed touched on exactly the issues it had hoped to address.

The 2012 proposal would have asked for an independent board to review the risks, including reputational risks, associated with high executive compensation levels and disclose the findings to shareholders.

"We were asking for an examination of whether Goldman's pay levels were appropriate," said Laura Campos, director of shareholder activities at the Nathan Cummings Foundation. "If people are only motivated by extremely high compensation, it focuses them on the wrong things and can be harmful to the culture."   Continued...

 
A Goldman Sachs sign is seen on at the company's post on the floor of the New York Stock Exchange, January 18, 2012. REUTERS/Brendan McDermid