The Central Laborers Pension Fund, an Illinois pension, is suing Goldman Sachs over the approximately $20 billion that the firm is looking to pay out in bonuses for 2009. Their rationale:
Defendants’ conduct shows that, even though Goldman is supposedly owned by public shareholders, defendants have scant regard for the interests of those shareholders.
This suit shows that the Illinois pension fund has scant regard for the evidence to the contrary regarding how Goldman Sachs’ takes care of its shareholders. Before 2008, in a decade of market outperformance, the firm paid out nearly 50 percent of net revenues in a combination of cash and shares to its employees, most of it in so-called bonuses. In 2008, when Goldman Sachs underperformed the entire financial services sector by about 10 percentage points, they paid their senior executives zero. In 2009, when they outperformed the financial services sector by nearly 100 percentage points, they intend to pay out 40 percent of net revenues in bonuses, all of it in the form of restricted shares.
Given these facts, it’s hard to see this lawsuit as anything but a waste of money by this pension fund’s leadership, who appear to be using their pensioners’ cash to indulge in political grandstanding. Who is breaching their fiduciary responsibility here?