Goldman Sachs Group Inc is being sued by an institutional investor who claims the firm is preparing to pay out improper bonuses.

The lawsuit, filed with the New York Supreme Court by the Security Police and Fire Professionals of America Retirement Fund, names chief executive Lloyd Blankfein and other executives and board members as defendants.

Goldman has faced a maelstrom of criticism for setting aside billions for year-end payouts soon after the firm paid back its $10 billion taxpayer bailout.

Goldman is accused in the lawsuit of blindly rewarding executives for corporate performance that has absolutely nothing to do with the skill of the company's employees. The lawsuit states that Goldman is estimated to issue payouts in excess of $22 billion.

Goldman spokesman Lucas van Praag said the lawsuit is completely without merit.

Wall Street's dominant firm, which repaid its federal bailout of $10 billion in June, announced last week that its top 30 executives would forgo cash bonuses and receive them entirely in restricted stock.

The lawsuit seeks to recover billions in compensation that Goldman has paid or plans to pay employees.

(Reporting by Steve Eder; Editing by Gary Hill)