Goldman Sachs became the latest bank to sustain a shareholder protest over executive pay on Friday when about a third of votes were cast against the remuneration of top managers led by Lloyd Blankfein.
Critics complained the bank had excluded the costs of a multibillion-dollar legal settlement for mis-sold mortgage-backed securities before the financial crisis when determining executive pay.
A proposal to separate the roles of chairman and chief executive after Mr Blankfein steps down received a similar level of support. The 61 year old has held both positions since 2006.
The rebellion over pay came even though the Wall Street chief took a pay cut in 2015 for the first time in four years. Mr Blankfein was handed a $23m package, down from $24m in 2014.
Gary Cohn, chief operating officer, and Harvey Schwartz, chief financial officer, similarly had their packages cut by $1m to $21m.
Nevertheless the pay motion was supported by only about 66 per cent of shareholders at the bank's annual meeting at its Jersey City skyscraper on Friday.
Goldman investors dissented a day after a majority of shareholders in Deutsche Bankvoted down its pay plan in a non-binding vote. Last month Citigroup sustained a 36 per cent vote against its executive remuneration deal.
Institutional Shareholder Services and Glass Lewis, corporate governance groups that advise investors on how to vote, recommended a vote against Goldman’s pay plan.
In a report published before the annual meeting, ISS complained performance results excluded the impact of a mortgage-backed securities settlement. The $5.1bn agreement wiped out the bulk of fourth-quarter profits.
The Wall Street bank was among several charged with mis-selling by the Department of Justice.
Goldman said its remuneration committee had discussed the settlement and “related historical considerations”, adding it was committed to a “pay for performance” philosophy.
It highlighted the pay deals were lower than a year before and said the remuneration plan reflected “financial results, which, while solid . . . reflected the challenges of a mixed operating environment”.
ISS, along with Glass Lewis, also supported the proposed requirement for an independent chairman. About a third of JPMorgan Chase shareholders voted this week to separate the chairman and chief executive positions after Jamie Dimon steps down.
ISS said of Goldman: “In view of the company’s problematic compensation practices and in consideration of historical legal and regulatory concerns, shareholders would benefit from the strongest form of oversight that could be realised by an independent board chairman.”
Goldman said the amalgamated job "is the most effective leadership structure for our firm at this time. If at any time our Governance Committee concludes otherwise, it will not hesitate to appoint an independent chairman."
- (Copyright The Financial Times Limited 2016)
