A bid by Goldman Sachs Group Inc. to settle a lawsuit over how much it pays directors was rejected by a judge who said that simply making changes in corporate governance didn’t provide enough benefit to the firm.
The ruling comes as part of a chancery court crackdown on so-called “disclosure settlements,’’ in which companies resolve investor suits by make additional disclosures about deals or compensation and no cash changes hands.
The lawsuit charged that a stock incentive plan for executives and directors was not sufficiently disclosed. The settlement terms involved no payments to shareholders, just an agreement to hire a consultant to review the pay of outside directors and additional disclosures, including an acknowledgement that Goldman Sachs directors are among the highest paid in the country.
The objections to the settlement terms came from Fordham University law professor Sean Griffith who said that the suit had “potentially-meritorious monetary causes of action’’ that were being extinguished without proper benefits in exchange.