A comedian named David Brenner used to do some clever observational humor. I remember one schtick about bizarre signs. Brenner claims a sign outside a Los Angles hospital said "No Barking". He quipped, "either the dogs in LA can read or the people here bark". Then there was the billboard outside a convent that said "No Tresspassing. Violators will be Prosecuted to the Fullest Extent of the Law". It was signed by "The Sisters of Mercy". Ba Da Bum.
If David Brenner were telling this story, he might start by saying, a Nun, a Priest and the CEO of a Jewish group walk into a corporate shareholders meeting... Sorry, I don't have a punchline. But it's no joke. A coalition representing Nuns, Priests and a Jewish group did show up at Goldman Sach's Annual Shareholders Meeting. They demanded to know why Goldman Sachs executives are being paid huge amounts of money. And that created a bit of public relations trouble. Here are some actual headlines:
"Nuns put Goldman Sachs on Spot on Exec's Pay" - Washington Times
"Philadelphia Nuns Call Out Goldman Sachs" - MyFoxPhilly.com
"Nuns Outraged by Goldman Sachs" - Money.MSN.com
Those religious groups want to know why Goldman's top five suits earned 69.6 million last year- even though profits declined significantly. The Nuns may think those sky-high salaries are sinful but that wasn't the point. The religious groups are longtime investors in Goldman Sachs- and they're concerned that humongous salaries are hurting the bottom line. The Nuns introduced a shareholder resolution asking Goldman Sachs to evaluate executive pay. Goldman Sachs urged investors to vote down the proposal- and investors did just that. Only four percent supported the Nuns. In fact, 73% supported the executive pay package.
I think it's fair to say Goldman Sachs has been taking it on the chin lately. Many people viewed the company as one of the villains in the financial meltdown. Last year the investment giant paid $550 million to settle an SEC lawsuit which claimed Goldman's misled investors about a mortgage-linked investment. Another recent headline explained that GS spent $700 million on legal representation last year. I guess that's not too surprising. Then there's a scathing Senate report on Goldman's (and other firms) activities during the financial crisis. That report has been sent to the Justice Department for additional investigation.
The Outcome: most of the headlines before the annual meeting focused on the Nuns. That put Goldman's in a tough position. I mean, how do you attack a position held by Nuns? As far as I can tell Goldman's ignored the Nun/Executive pay issue. Did this work? Is it an effective PR strategy? In news reports that followed the annual meeting- I didn't see any references to Nuns. Most reports noted the executive pay proposal was voted down and that was it. But is Goldman's stand good public relations strategy? Is it wise in light of the ongoing legal troubles? What should Goldman's have done instead? As SteveBauerMedia has said before- paying executives gobs of money when so many Americans are jobless makes companies look heartless. That said, Goldman's appears to be doing just fine. And yet, I still think there's a significant possibility the company might someday be "prosecuted to the fullest extent" in the court of public opinion. What do you think?
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Not sure public opinion matters so much to the bottom line of Goldman Sachs. What matters more is if the Federal Government keeps tapping Goldman Sachs Execs to fill top Financial positions in Washington.
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