LLOYD Blankfein, the embattled chairman and chief executive of Goldman Sachs, is facing a demand to separate his two top roles at a meeting of the investment bank’s shareholders tomorrow.
Shareholders, who have been shaken by a civil fraud suit brought against the bank by the Securities and Exchange Commission, will be asked to vote on whether Blankfein should follow the example of UK companies and agree to split the role of chairman and chief executive of the group.
The demand, which has the support of the proxy resolution service Glass Lewis, comes from the Christian Brothers Investment Services group, a Goldman shareholder. A big campaigner on corporate governance issues, it argues that an independent chair avoids conflicts of interest and improves oversight of risk.
Julie Tanner, who is leading the move, is confident the resolution will get 50 per cent support. “There will be widespread support for this,” she told City A.M. yesterday.
Although not as common as in the UK, where separation is considered best practice, nearly 40 per cent of companies listed on the S&P 500 index have independent chairs. And shareholder resolutions urging the separation of the twin roles averaged 36.9 per cent at 30 companies in the last year.
In its proxy document Goldman says that it does not have a policy about whether the roles should be combined or separate but urges shareholders to vote down the proposal, which, it says, would limit its flexibility in determining an appropriate structure.
Goldman will not have to act as a result of a vote in favour of separation but a majority vote against the group will be a setback at such a difficult time for the group.
Some banking experts have suggested that Warren Buffett, a Goldman shareholder who has spoken up as backer of the firm during its recent troubles, would make an ideal independent chairman of the firm.
Sources close to BP, the British oil major which is battling to save its reputation in the face of a massive oil spill, say that having a separate chair has given shareholders a more independent sounding board to hear their concerns during its particular crisis.
Shareholders at Goldman’s meeting at Old Slip in lower Manhattan will also get the chance to vote on the bank’s pay policy.
Blankfein, remains a popular figure at Goldman despite the SEC case, although in recent days there has been growing talk about the importance of appointing an independent chairman who might be able to navigate the controversies the bank is dealing with.