More Cowbell . . .

courtesy of wikimedia - photo by Bart Everson

Some very interesting stories from unexpected sources:

First, the Wall Street Journal reports what most thoughtful observers know already which is that the War on Drugs has been a miserable failure and that we need to seriously consider alternatives to mass incarceration and the fueling prison-industrial complex. 
See Rethinking the War on Drugs

Second, again from the Wall Street Journal, a county court judge in North Carolina just reversed a death penalty conviction based on racially biased jury selection during the trail phase.  Judge Gregory Weeks applied a new North Carolina statute that requires death sentences to be changed to life without parole if a judge finds that racial bias played a role in jury selection. "Judge Weeks . . . said in court Friday that North Carolina 'prosecutors intentionally discriminated' against potential black jurors during jury selection historically and in the Robinson case."
See Bias Law Spurs Judge to Toss Out Death Sentence

Shareholder Angst

photo by Darrell Sapp/Pittsburgh Post-Gazette

Angry shareholders forced a delay yesterday at the annual meeting of the EQT Corp. as they openly defied CEO David Porges shouting questions at him about executive compensation, the Buffet Rule, and shareholder proposals that management was actively seeking for shareholders to reject, including a limit on Board member tenure from three years to one year.  The EQT Corp. is a 120 year-old energy company that is one of the United States' largest natural gas producers operating in four states and based in Pittsburgh, PA.

From the Pittsburgh Post-Gazette:  "The annual shareholders meeting for EQT Corp. was adjourned for more than an hour this morning after angry shareholders began shouting questions at chief executive officer David Porges about fair executive compensation, the ethics of its board of directors and a proposal to shorten director tenures to one year."

Responding to the angry shareholders' concerns, CEO Porges claimed that EQT's executive compensation packages were "much fairer" than the average "ratio of pay between the nation's CEOs and regular workers."  Further attempting to minimize the shareholder outrage, "Mr. Porges said the disruption was part of a 'broader movement' of anti-corporation sentiment.  'I don't think the unrest had anything to do with EQT proper,' said Mr. Porges.  Their concerns were tied to general industry practices like hydraulic fracturing and a frustration over what they see as outsized compensation and profit at a time when the state is cutting budgets for education and transportation."

Shareholders did succeed in passing a shareholder proposal that management opposed limiting tenures for Board members to just one year.  Rarely do shareholder proposals pass, but this proposal was backed by the Ohio Public Employees Retirement System and shareholders succeeded in passing it over management's objections.

Shareholder anger may be a harbinger of things to come as both institutional investors and nominal shareholders seem to be ratcheting up the disaffect with outsized executive compensation packages and corporations that appear to be working for its executives first and its shareholders later.  Will corporate leadership pay attention?

Citigroup Shareholders Reject Executive Compensation Plan

Dodd-Frank requires a non-binding vote by a company's shareholders on whether they approve of the executive compensation plan disclosed in its proxy material, known as the "say on pay" provision. Citigroup's shareholders today rejected the executive compensation plan submitted by the company. While non-binding, the "say on pay" vote is considered to carry significant weight as a shareholder signal to management that the managers are acting outside of shareholder approval.

Per the Wall Street Journal: "Shareholders of Citigroup Inc. on Tuesday handed the bank a scathing rebuke, rejecting a board-approved compensation package for its senior executives that boosted Chief Executive Vikram Pandit's 2011 pay to $14.9 million from $1 a year earlier.

The shareholder vote, mandated by the Dodd-Frank financial overhaul law, is nonbinding and won't require Mr. Pandit or Citigroup's other executives to give back pay they have already received. But it is a rare setback for a large corporation and could force Citigroup to rethink aspects of its executive-pay practices. Corporate governance advisers had criticized Citigroup's plan because it failed to closely link pay to performance."

Citigroup's shareholders are the first of any major corporation to reject the executive compensation plan submitted for approval. The question is whether the board will take this non-binding vote seriously and begin to address concerns that pay is not significantly tied to performance at Citigroup. Early statements seem to indicate that management will consider this vote a serious rejection of business as usual.

Board chair Richard Parsons responded as follows: "The result 'is a serious matter,' Citigroup Chairman Richard Parsons said at the end of the company's annual meeting in Dallas, where the shareholder vote occurred. The directors will consult with shareholder groups to determine their concerns, he said. . . . The setback followed negative recommendations by two proxy-voting firms widely followed by institutional investors, and could foreshadow increasing shareholder activism. The California Public Employees' Retirement System, a major shareholder, voted against Citigroup's executive-pay practices because 'the bank has not anchored rewards to performance,' spokesman Brad Pacheco said."

Is more shareholder activism in the executive compensation arena on the horizon? The New York Times (DealBook) seems to think so. "The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street to wealthy institutional investors like pension fund and mutual fund managers. About 55 percent of the shareholders voting were against the plan, which laid out compensation for the bank’s five top executives, including Mr. Pandit. 'C.E.O.’s deserve good pay but there’s good pay and there’s obscene pay,' said Brian Wenzinger, a principal at Aronson Johnson Ortiz, a Philadelphia money management company that voted against the pay package. Mr. Wenzinger’s firm owns more than 5 million shares of Citigroup."

If institutional investors become aggressive in combating the executive compensation problem in the United States, then we could see real change.



(photo courtesy of Aleš Gruden at sl.wikipedia)

Eight More Banks Fined for Abusive Foreclosure Practices

Although federal and state officials announced a $25 billion settlement last month with the nation’s five largest mortgage servicing firms, including Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co., Citigroup Inc. and Ally Financial Inc., the Federal Reserve has named eight more banks to that list of mortgage servicers that it intends to fine for foreclosure abuse primarily through the use of “robo-signers.” The eight additional banks the Fed has deemed to have engaged in abusive foreclosure practices include HSBC Holdings PLC’s U.S. bank division, SunTrust Banks Inc., MetLife Inc., U.S. Bancorp, PNC Financial Services Group Inc., EverBank, OneWest Bank and Goldman Sachs Group Inc. The initial five banks that engaged in foreclosure fraud and abuse were fined over $760 million; no fines for the latest eight have been announced.

The Fed, in spring 2011, ordered several of the largest banks engaged in mortgage lending to review their foreclosure practices. Now, the bank regulators are moving forward to help distressed homeowners by hiring independent consultants to review the bank’s foreclosure files. This arrangement is different than the $25 billion settlement; consumers have to request a review of their case under the banks’ review process. Thus, if consumers are deemed to have received a “financial injury” through abusive foreclosure practices, they may be in line for compensation.


(photograph of the Federal Reserve Bank courtesy of Dan Smith and available through WikiMedia Commons)

Chuck D - Hip Hop and the Law

(Photo by Tom Sheehan)

Alternatives to Foreclosure Tested

Foreclosures continue to plague main street Americans. Working to resolve the continuing foreclosure crisis, Bank of America has rolled out a new program that it thinks might help remedy the crisis: a deed-for-lease program, called “Mortgage to Lease.” This program, allows homeowners who face foreclosure to give/return their mortgage deeds to the bank, and then, in turn, sign leases to remain in their homes as renters. Although the program remains small—and invite-only—Bank of America is attempting to create alternatives by reaching out to homeowners rather than act adversarially. BofA does not expect the “deed-in-lieu” to continue forever. If however, the deed-for-lease program proves less costly than eviction, is less costly to the bank and does not hurt the homeowner’s credit as much as a traditional foreclosure, the program may be expanded.

BofA maintains that it remains optimistic, yet realistic. Owners, after giving up the deed, would be offered one-year leases with the option to renew, at a rate the banks determines to be at or below the current market price. And if this small program works, BofA plans to broaden the program beyond the 1,000 or so homes in Nevada, Arizona, and New York that it has initially targeted. Because of increased foreclosures resulting from the big banks fraudulent “robo-signing,” banks are looking for alternatives to foreclosure, including this Mortgage to Lease program. According to the Wall Street Journal: “One of the outcomes of the ‘robo-signing’ scandal is that it is more difficult to foreclose [now]. . . .It’s more worthwhile for the banks to pursue alternatives.”


(Image courtesy of Wikimedia Commons)

Failing the Gender Diversity Question

Two surprising events have punctuated disappointing news in connection with gender diversity in the corporate world. First, as Facebook prepares to launch perhaps the most anticipated Initial Public Offering (IPO) EVER, news emerged in recent months that Facebook's Board of Directors is populated with seven male directors (out of seven), meaning zero female directors. For a company perceived to be on the very cusp of forward-thinking business modeling, this lack of gender diversity on the Board has attracted the attention (and raised the ire) of institutional investors.

Per the Wall Street Journal article California Pension Fund Challenges Facebook Over Diversity on the Board: "In a letter addressed to Facebook Chief Executive Mark Zuckerberg on Tuesday, California State Teachers' Retirement System Director of Corporate Governance Anne Sheehan wrote that, 'We are disappointed that the Facebook board will not have any woman members. This is particularly glaring at a time when there is clear evidence that companies with diverse boards perform far better than the companies with more homogenous boards,' Sheehan wrote."

Per the Forbes article Why Long-Term Investors are Worried About Facebook's Lack of Board Diversity: "Although Facebook has received a lot of positive attention for its inclusion of a woman, Sheryl Sandberg, as its Chief Operating Officer, the company has not appointed a single female candidate to its board, a characteristic that makes it a lot like other major U.S. companies that have zero women on their boards such as Urban Outfitters, Under Armour, and Zale, the diamond company. According to a recent report by GMI Ratings, the corporate governance research firm, 40% of the U.S.’s largest publicly listed companies don’t have any women on their boards. Facebook, though, has attracted an unusual amount of attention."

It is difficult to imagine how in 2012 Facebook, Urban Outfitters, Zale's and 40% of the largest publicly listed companies in the U.S. do not have a single female board member. This failure appears to be an enormous disconnect between emerging evidence supporting the fact that diversity increases success and profit of a corporation and the continuing survival of the old boys' network (or the new boys network in Facebook's case). Can this failure amount to a duty of care breach (gross negligence in a Board failing to inform itself)?

To this lack of gender diversity on corporate boards, Facebook Chief Operating Officer Sheryl Sandberg (not on the Board) opined in PCMag.com: "'I really think we need more women to lean into their careers and to be really dedicated to staying in the work force. I think the achievement gap is caused by a lot of things. It's caused by institutional barriers and all kinds of stuff. But there's also a really big ambition gap,' Sandberg said. 'If you survey men and women in college today in this country, the men are more ambitious than the women. And until women are as ambitious as men, they're not going to achieve as much as men,' she added."

Second, as the Masters Golf Tournament wrapped up Sunday with its thrilling overtime finish, the question of whether the all-male Augusta National Golf Club would invite IBM's new female CEO, Virginia Rometty, to become its first female member, remained unanswered. IBM is one of the Masters three primary corporate sponsors (along with AT&T and ExxonMobil). Augusta National, which hosts the Masters, has offered the past four IBM CEO's membership (all men), but has refused to date to extend an invitation to Ms. Rometty who took over as CEO at the beginning of 2012.

Of course, Augusta National has had a problem with exclusion for decades. It was not until 1990 that the club admitted its first male African American member. Rometty was in attendance at the tournament on Sunday for the exciting finale, with her status as one of the most powerful CEOs in the world cemented and on clear display, despite the fact that she, by nature of her gender, has not been invited to become a member of Augusta National. While Augusta National remains a private club, and outside the Constitutional mandates forbidding discrimination, many believe it is time for Augusta National to admit women, particularly the powerful CEOs of its major corporate sponsor.


(Photo of Sheryl Sandberg (top), Facebook COO, courtesy of Wikimedia Commons; Photo of Virginia Rometty (left), CEO of IBM, courtesy of Wikimedia Commons)

Investor Activism and Private Prison Corporations

In January 2012, the United Methodist Church took a stand against private profits generated from imprisoning American citizens. The UMC board of trustees that oversee the investment of company employees in the churches' pension fund voted to discontinue any investment in companies that generate or derive profit from the management and operation of prison facilities. Recognizing the perverse incentives attendant in profiting from mass incarceration, the United Methodist Church decided to "vote with its feet (or $$)" by moving its money.

According to the UMC website and author Heather Hahn: "Private prison companies are big business. But, is it moral for United Methodists to make a profit from the incarceration of people? The United Methodist Church’s pension agency has pondered that question since May [2011]. The Board of Pension and Health Benefits announced Jan. 3 [, 2012] its decision to prohibit investments in companies that derive more than 10 percent of their revenue from the management and operation of prison facilities.

'It came down to that profiting from the incarceration of others was just not consistent with our view of what the (denomination’s) Social Principles ask for,' said David Zellner, the board’s chief investment officer. . . . The week after Christmas, the board sold about $1 million in stock in two companies that fell under the new screen — Corrections Corporation of America, more commonly called CCA, and the GEO Group."

The United Methodist pension fund is the largest church directed pension fund in the world with nearly $17 billion in assets. More than 74,000 clergy and personnel participate in the UMC pension fund and benefits programs.

Is Investor Activism one potential avenue to address the perverse incentives perpetuated by private prisons and those corporations that profit on the basis of increasing prisoner population around the nation and world? Is it immoral to "Bank on Bondage"?

[photograph courtesy of the American Civil Liberties Union]

Private Prison Profiteering

In the past few months, I've been thinking a lot about the prison industrial complex and the role of private prison corporations in locking up American citizens. Over at the Concurring Opinions blog, I posted several times in February [2012] connecting the principal of corporate profit maximization with the responsibilities of executives and Board members of private prison companies.

Nobel laureate economist Paul Krugman in the New York Times has just weighed in on the privatization of prisons (amongst others areas, including education), describing the role of lobbyists in influencing and creating legislative policies that impact our lives. In his opinion piece Lobbyists, Guns and Money, Krugman details the activities of ALEC (American Legislative Exchange Council), a purported "non-partisan" corporate backed lobbying organization and its massive emerging influence. Krugman writes:

"What is ALEC? Despite claims that it’s nonpartisan, it’s very much a movement-conservative organization, funded by the usual suspects: the Kochs, Exxon Mobil, and so on. Unlike other such groups, however, it doesn’t just influence laws, it literally writes them, supplying fully drafted bills to state legislators. In Virginia, for example, more than 50 ALEC-written bills have been introduced, many almost word for word. And these bills often become law.

Many ALEC-drafted bills pursue standard conservative goals: union-busting, undermining environmental protection, tax breaks for corporations and the wealthy. ALEC seems, however, to have a special interest in privatization — that is, on turning the provision of public services, from schools to prisons, over to for-profit corporations. And some of the most prominent beneficiaries of privatization, such as the online education company K12 Inc. and the prison operator Corrections Corporation of America, are, not surprisingly, very much involved with the organization."

Predictably, based on the last sentence above "And some of the most prominent beneficiaries of privatizations, such as . . . the prison operator Corrections Corporation of America, are, not surprisingly, very much involved with the organization," Krugman received a bullying response letter from the Corrections Corporation of America (CCA) trying to force a retraction for things that Krugman did not SAY, but may have implied.

The CCA claims that it does not, and never has lobbied for increasing prison sentences or developing new areas for detention (like criminalizing immigration). The CCA letter claims that "CCA does not and has not ever lobbied for or attempted to promote any legislation anywhere that affects sentencing and detention — under longstanding corporate policy."

Krugman is dubious about this claim, as am I. CCA employs dozens of lobbyists and spends millions of dollars per year lobbying legislatures around the United States in connection with promoting its business interests. To believe CCA's claim that it does not seek to influence sentencing policy or detention legislation requires one to believe that it disciplines its lobbyists to argue for and on behalf of policies that only impact privatization efforts. CCA was in the news last month because it sent letters to 48 states offering to buy the state's prisons in exchange for a 20 year agreement to pay the company to warehouse its prisoners and contractually agree to keep the prison filled at 90% capacity. A state agreeing to keep its prisons filled at 90% capacity seems to me to be an attempt to influence sentencing and detention.

I respond to CCA's claim by asking readers to consider the following question:

“Is it possible, that the Board of Directors of private prison companies . . . are literally strategizing ways to increase the prison population in the United States? To effectively increase profits for shareholders, are private prison companies not only cutting services to prisoners as a way to increase profits, but are they now drafting policies, lobbying politicians, and actively debating ways to ensure that a steady stream of “clients” continues into the private prisons that are proliferating across the United States (now over 25% of prisoners are housed in private prison facilities)?”

DIVERSITY AND THE BOARDROOM 2012

Forty-eight years after the passage of the Civil Rights Act of 1964, prohibiting racial and gender discrimination in American business, the picture of the boardroom in public firms remains remarkably monolithic. According to the Alliance for Board Diversity, three-quarters of all directors within the Fortune 500 are White men, even though people of color comprise 33 percent of US population and women comprise over 50 percent. The picture gets even grimmer when leadership positions are considered: White men constitute 94 percent of board chairs; 85 percent of lead directors; 79 percent of audit chairs; and, 83 percent of compensation committee chairs.

Given the increasing political power of public corporations in America and the economic stakes for our entire society in sound corporate governance this reality should be deeply disturbing to anyone who believes in a representative democracy where those holding the levers of power reflect our society generally or an egalitarian meritocracy where competitive mettle rules over entrenched power. The issue of the legitimacy of the process by which economic and political power is allocated through the public corporation is more crucial than ever, and is exponentially more important than in 2000, when I published Diversity and the Boardroom. Simply put, an "old boys club" dominates the apex of our economy, and due to Citizens United, our political system too. This is no meritocracy; this is crony capitalism. In 2004, I argued that the homosocial reproduction that dominates board selection process resulted from CEOs (and their friends) gaming the system to attain enhanced compensation through the exploitation of cultural affinity. Since 2004, progress has stalled and boards are getting less diverse.

Meanwhile, the empirical evidence in favor of board diversity as a means of achieving superior governance outcomes generally strengthened since 2004. Thus, "subprime lenders had boards that were busier, had less tenure, and were less diverse with respect to gender" than financial firms that avoided more risky subprime lending.  Another recent study found that firms with more gender and ethnic diversity achieved superior reputation outcomes and superior innovation outcomes. While the evidence does not always find statistically significant gains from diversity in the boardroom, on balance the record is clear: board diversity pays. In particular, diversity is one means of addressing weak corporate governance. Firms that broadly embrace diversity (such as in senior management) also achieve superior outcomes.

One cause for some hope lies in recent SEC rulemaking which requires that firms disclose the role of diversity in director selection. On the other hand, given the DC Circuit's ruling in Business Roundtable v. SEC, and the SEC's subsequent determination to leave board selection up to current management, homosocial reproduction may persist far into the future. Notably, recent studies show that both of these events caused a loss of shareholder value in firms most likely to be affected.

Banks Hoarding Cash (Still)

Corporate Justice Blog contributor Steve Ramirez has chronicled (for going on three years now) the refusal of U.S. banks to lend cash on hand preferring instead to hoard cash for purposes of balance sheet vitality and deliverance of record executive compensation. This hoarding has been particularly galling when viewed against the backdrop of government corporate welfare in the form of TARP funds distributed to many of these banks and the backdoor lending of trillions of dollars to these banks from the Federal Reserve bank. A new report from Bloomberg indicates that this hoarding of cash continues by Wall Street banks as credit continues to be tight and lending has not been freed up for consumers.

From Bloomberg's report Following the Corporate Cash Hoard:

Are Executives Overboarded?

The Wall Street Journal asked recently whether corporate executives are overboarded. In a report by research firm Equilar Inc., the Wall Street Journal reports that approximately 118 Fortune 1000 CEOs sit on at least three boards of other corporations, including there own. This “overboarding” purportedly overstresses CEOs and makes it truly difficult for the leaders to concentrate on their day jobs. Board positions last year required an average commitment of 228 hours, with pay exceeding $232,000 in 2010.

From the Wall Street Journal: "With stricter regulations and greater legal scrutiny increasing the time a board seat demands, certain investors are questioning the value of CEOs serving on multiple boards. Critics say many senior executives are too "overboarded" to do their jobs and monitor management elsewhere. 'Boards are facing unprecedented challenges, and we need CEOs to focus on their day job,' says Anne Simpson, head of corporate governance for the California Public Employees' Retirement System, the nation's biggest public pension fund. 'We do not like to see a CEO getting overloaded.'

In a related story, critics of Disney's recent move to elevate CEO Robert Iger to Chairman of the Board indicates that institutional shareholders are concerned with not only overstressing CEOs, but with concentrating too much power in one leader. Some Disney shareholder are aghast to see the Disney board return Iger to the same position that was held by Michael Eisner (CEO and Chair of the Board) when he entered into the infamous Michael Ovitz employment contract that led to so much pain for Disney and its shareholders.

After Disney announced its strategic decision to give Iger the additional role as chair, while also paying him over $31 million dollars for 2011, some of its shareholders cried foul, including Institutional Shareholder Services Inc. Disney nonetheless believes this move is in the company’s best interest. However, Institutional Shareholders Services issued a report disputing that combining so much power in Iger was in the shareholders’ best interest because, in 2004, the company decided to end this practice of dual responsibilities after the shareholders protested this structure, causing Michael Eisner to give up his chairmanship. ISS alleges this latest reversal compromises the independent board leadership.

2012 SE/SW People of Color Legal Scholarship Conference to be Hosted by Samford University Cumberland School of Law

Samford University Cumberland School of Law in Birmingham, Alabama, will be hosting the 2012 Southeast/Southwest People of Color Legal Scholarship Conference from March 29th through April 1st. The theme or title for this year's conference is "Transformative Advocacy, Scholarship, and Praxis: Taking Our Pulse." You may access information about the conference at the following link: http://www.samford.edu/cumberland/seswpocc2012/default.aspx?id=45097158634

Attorney General Defends Efforts to Combat Financial Fraud

In a recent speech at Columbia University, Attorney General Eric Holder Jr. touted the work of the Justice Department in its pursuit Wall Street criminals. While the Justice Department has been under intense criticism for its failure to pursue wrongdoers that perpetuated the 2008 financial crisis, Holder’s comments come on the heels of President Obama’s announcement during his State of the Union Address in January that the government is committed to bringing justice to Wall Street through a newly created task force. Holder opined at Columbia that the Justice Department struggles to arrest Wall Street wrongdoers because on its face, executives’ conduct has been unethical and reckless, just not criminal. According to the New York Times DealBook Holder said: “We found that much of the conduct that led to the financial crisis was unethical and irresponsible,” said Mr. Holder, who earned his undergraduate and law degrees at Columbia. “But we have also discovered that some of this behavior — while morally reprehensible — may not necessarily have been criminal.” That said, Holder assured that he “will not hesitate to bring prosecutions” when criminal wrongdoing is evident.

While Justice has had some recent setbacks, the Department’s task force has issued civil subpoenas to eleven financial companies that it claimed played a role in the housing crisis. Holder assured that, with several investigations ongoing, to expect more subpoenas to follow.

More Goldman Sachs Drama

Goldman Sachs continues to be dogged by accusations and charges that besmirch the venerable investment bank's once sparkling reputation. The latest is a resignation letter published by the New York Times wherein a mid-level company Vice-President (Greg Smith) claims that Goldman has lost its way, that the culture at has become "toxic and destructive," and now the "morally bankrupt" firm cares much more about firm and individual profit than it does about its clients. In response to this resignation swipe, Goldman Sachs executive leadership including CEO Blankfein and President Cohn have scrambled over the past few days to respond. The most explosive of Smith's claims follow (from the NY Times):

"When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival. . . .

. . . I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God's work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact."

Pretty serious allegations.

In response, Blankfein, Cohn and others have responded (from the Goldman Sachs website):

"By now, many of you have read the submission in today’s New York Times by a former employee of the firm. Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.

In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion. But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.

While we expect you find the words you read today foreign from your own day-to-day experiences, we wanted to remind you what we, as a firm – individually and collectively – think about Goldman Sachs and our client-driven culture. . . .

And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that the firm provides exceptional service to them. For the group of nearly 12,000 vice presidents, of which the author of today’s commentary was, that number was similarly high."