The lawsuit has plenty of company. Shareholder lawsuits about corporate malfeasance in the setting of executive pay and comp packages are increasing in frequency.
Per the article, the IBEW (shareholders in GS) are contesting the actions of management on two points:
1. What the IBEW sees as excessive compensation, towit, nearly half of the profits of 2009.
2. The diversion of capital (in the amount of hundreds of millions of dollars) in the company to a “charity,” without a vote of the shareholders.
The executive staff of a public traded corporation have a fiduciary duty to the shareholders, and the IBEW contends that the management of GS has failed to exhibit this duty in their actions. There is another lawsuit already on file against GS on the first of these two issues.
As I said, shareholder lawsuits against corporations for claims of executive pay violating fiduciary duty are becoming increasingly common, and for good reasons. It is pretty clear that many companies have feckless idiots for management.
You must have forgotten, Dave, that one does not determine either truth or morality by voting. Antisemitism was quite popular in the Nazi Germany. For over 70 years, the Communist Party was very popular in Russia. We know the costs and other ultimate results of that popularity.
Your argument is fallacious prima facie.
Per the article, the IBEW (shareholders in GS) are contesting the actions of management on two points: 1. What the IBEW sees as excessive compensation, towit, nearly half of the profits of 2009."
This claim is also fallacious for a simple reason. Executive compensation is but one expense in the costs of doing business, just as are rent, office supplies, etc. It is a well-known fact that an outside observer cannot in principle determine that a particular expenditure is excessive: one has to see all details and do so contemporaneously with decision-making. Why didn't they bring an action against "excessive rents," "excessive office-supply expanses" or some other such thing? For a simple reason: the anti-capitalist witch-hunt was succcessful, and anything against "bonuses" has a good chance of finding a sympathetic jury. Try instead to find a juror who would be outraged by the fact that a particular building could've been had for $12M annual rent rather than, say, $13M. That's all.
While an outside observe cannot determine with certainly that something is excessive and possibly fraudulent, he can certainly be suspicious. The course of action then is a standard one: when management and/or board lose confidence of shareholders, they should be replaced. No wrongdoing is necessary; lack of confidence is sufficient.
Ah, but that is not what the suit is about... Proletarians of all countries unite against the Wall Street. There is no difference between this garbage lawsuit and the recent claim of the Greek Prime-minister that Greek problems are due to short-seller. Ridiculous, but it works. Even you find merits in those claims.
"2. The diversion of capital (in the amount of hundreds of millions of dollars) in the company to a “charity,” without a vote of the shareholders."
True. I really have a problem with that. But can't you see while rereading your own words that this has nothing to do with compensation? (It's the lawyers' practice: when shooting, bring up everyting --- you never know what may resonate with the jury or the judge. Strange that you JUSTIFY that).
"The executive staff of a public traded corporation have a fiduciary duty to the shareholders,"
Thank you, but there is no need to repeat the textbooks verbatim. If you suspect that your readers don't know what "fiduciary" means, explain, but quoting textbooks serves no purpose.
"and the IBEW contends [I know; the question was whether there was any merit in that contention] that the management of GS has failed to exhibit this duty in their actions."
"As I said, shareholder lawsuits against corporations for claims of executive pay violating fiduciary duty are becoming increasingly common, and for good reasons. It is pretty clear that many companies have feckless idiots for management."
Well, you were quite reasonable up to this point. The last statement, however, is at par with something may year at an oriental bazaar. I have no comment.