I first thought this was an April Fool's story, but it's not. According to Guardian UK, a group of nuns is pushing Goldman Sachs (NYSE: GS ) to reconsider its pay practices:
The Sisters of Saint Joseph of Boston, Sisters of Notre Dame de Namur, the Sisters of St Francis of Philadelphia and the Benedictine Sisters of Mt Angel -- all investors in the bank -- have put their name to a proposal to review its remuneration policies, after it emerged its five most senior employees were collectively awarded $69.5m (43m pounds) in pay last year.
The proposal calls for evaluating whether Goldman's compensation is excessive, how laying off low-level workers affects senior executives' pay, and how fluctuations in revenue affects senior executives' pay.
The group is made up of Goldman shareholders, so they're entitled to request this proposal. In fact, kudos to them for exercising their shareholder rights.
But be realistic. These almost certainly are not longtime Goldman investors looking after shareholders' interests. This is quite likely a (perhaps justified) short-term targeted campaign protesting executive pay's effect on society.
If that's the case, here's a question: Why pick on Goldman?
Goldman CEO Lloyd Blankfein made $19 million last year. This is practically par in the CEO world. According to data from Capital IQ, Occidental Petroleum (NYSE: OXY ) CEO Ray Irani made $76 million last year. Larry Ellison of Oracle (Nasdaq: ORCL ) made $70 million. Sam Palmisano of IBM (NYSE: IBM ) , $32 million. Twenty-eight corporate executives made more than $25 million last year -- none of them came from Goldman.
So why the fuss?
I think the problem people have with banker pay isn't that they feel it's unjustified. Frankly, it often is justified, for the same reason Irani's, Ellison's, and Palmisano's pay is justified: Talented bosses can create huge profits that warrant huge paychecks.
It gets touchy with banks because when banks face a crisis, the burden is often paid by everyday folks. You may have never heard of a credit default swap, but you might lose your job because of them. Bankers cause collateral damage. That doesn't happen in many other industries. When WorldCom went bankrupt, its shareholders, debt holders, and employees suffered. That was it. When Lehman Brothers went bankrupt, every inch of the global economy took a hit. The mistakes of bankers cause very real social ramifications in ways other industries can't. That's why so many people -- even nuns -- become outraged at their compensation.
What about you?