| WILMINGTON, Del.
WILMINGTON, Del. Jan 21 A shareholder sued
Goldman Sachs Group Inc's (GS.N) board for excessive bonuses
and wants bank executives to pay the $500 million in charitable
donations that Goldman is making after being criticized for its
Goldman Sachs bonuses substantially exceed what competitors
pay "even though, on a risk-adjusted basis, Goldman's officers
and managers have performed over the past several years in a
manner that is, at best, only average," the lawsuit says.
The Southeastern Pennsylvania Transportation Authority
(SEPTA), which runs public transit in the Philadelphia area,
filed the lawsuit on Wednesday in Delaware's Chancery Court.
SEPTA said Goldman has been allocating nearly half of its
revenues to staff bonuses even though the company's performance
has been less a benefit of management skill than risks it has
taken with investors capital.
"Goldman's employees are unreasonably overpaid for the
management functions that they undertake, and shareholders are
vastly underpaid for the risks taken with their equity," it
The lawsuit is entirely without merit, a Goldman spokesman
Goldman Sachs released its earnings report on Thursday and
dramatically changed course on pay by setting aside nothing for
compensation in the fourth quarter. That helped the company
report better earnings than analysts had forecast.
The company said it would give $500 million to charity, in
part to improve its public image. The SEPTA suit demanded that
Goldman's board make company management pay any charitable
contributions that are intended to apologize for its
Large bonuses and the government's $700 billion bailout of
banks have outraged many Americans who are struggling with
double-digit unemployment. Several groups planned to protest
against Wall Street excess outside Goldman Sachs offices.
Members of Congress have proposed taxing bonuses paid by
banks that received government bailout money, which includes
Goldman Sachs. SEPTA's suit demanded such a tax be paid by
Goldman Sachs managers, not shareholders.
The case is Southeastern Pennsylvania Transportation
Authority derivatively on behalf of the Goldman Sachs Group Inc
v Lloyd C. Blankfein et al, Court of Chancery, State of
Delaware, No. 5216.
(Reporting by Tom Hals; additional reporting by Steve Eder in
New York. Editing by Robert MacMillan)