The boards of Goldman Sachs, Morgan Stanley and JPMorgan Chase have been called upon by NYC Pension Funds and City Comptroller John Liu to strengthen 'clawback' language in top executives' compensation agreements. The pension fund group gave JPMorgan and Morgan Stanley credit for introducing new clawback provisions in the wake of the financial crisis, but said all three banks need to go further in curbing "excessive risk-taking or improper or unethical conduct" through pay policies.  The funds held $483.3 million worth of stock in the three banks as of Monday.

In shareholder proposals, the pension funds asked that JPMorgan and Goldman remove the word "material" from language in compensation contracts that require a "material" loss or reputational harm to have occurred before executives' pay can be reclaimed.  They also proposed that all three banks make changes so that supervisors' pay can be reclaimed for the bad behavior of employees they manage, and that all clawback actions be disclosed to shareholders.

According to a release from Liu's office,  JPMorgan, Goldman and Morgan Stanley have each paid more than $100 million over the past 18 months to settle state or federal charges in connection with mortgage securities and that enacting new proposals would ensure that no executive is rewarded for improper or unethical behavior. Representatives for the 3 companies did not comment.  [Reuters 12/21/11]