Goldman, Catholic Nuns Discuss Compensation - TheStreet

Goldman, Catholic Nuns Discuss Compensation

A coalition of shareholders, led by the Nathan Cummings Foundation and the Benedictine Sisters of Mt. Angel, put pressure on the investment bank to reduce employees' pay.
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BOSTON (

TheStreet

) -- Did a guilt trip from a group of Catholic nuns help to prompt

Goldman Sachs

(GS) - Get Report

to change its ways on compensation?

Amid protests from the public and shareholders, Goldman Sachs said Dec. 10 it will change how it pays bonuses and allow an advisory vote on the matter at its 2010 annual meeting. The New York-based bank, which received a $10 billion government bailout last year, booked $23 billion in profit during the first nine months of 2009. Compensation totals $16.7 billion, and part of that amount will be paid in stock as long as five years from now instead of cash.

Before Goldman Sachs' decision, a coalition of shareholders, spearheaded by the Nathan Cummings Foundation and the Benedictine Sisters of Mt. Angel, Oregon, filed a shareholder resolution urging its Board of Directors to review pay disparity and the appropriateness of its compensation packages. The resolution was filed to appear in the 2010 proxy and be voted on at the stockholder's meeting.

"Goldman Sachs' announcement of record bonuses is a stark reminder about how executive compensation is spiraling out of control for many firms," said Sister Judy Byron, who coordinates the faith-based Northwest Coalition for Responsible Investment. "It is important that citizens and shareowners both act as voices of reason."

Laura Shaffer, director of shareholder activities of the Nathan Cummings Foundation, said its resolution garnered attention from Goldman Sachs.

"We received a call from Goldman's head of investor relations right after we filed our initial press release, and they did offer to talk with us," she said. "At this point, we are working with our other filers on setting up a dialogue with the company."

Little has changed at Goldman Sachs, Shaffer said, because total compensation remains lofty. While Goldman Sachs' top 30 executives will receive stock instead of cash, the total hasn't been determined. ``It was kind of a brilliant move on the company's part to deflect the focus," she said. "The absolute compensation levels remain the same, and that is really what has angered so many people in the first place."

The agreement to hold a shareholder vote on executive compensation is a first for the U.S. banking industry. Goldman Sachs said the decision on its compensation practice followed meetings with shareholders since third-quarter earnings were announced Oct. 15.

-- Reported by Joe Mont in Boston.