Bloomberg News

Goldman Reaches Deal to Drop Proposal for Separate Chairman

April 10, 2013

Goldman Sachs Group Inc. CEO Lloyd C. Blankfein

Goldman Sachs Group Inc. awarded Chief Executive Officer Lloyd C. Blankfein $21 million in compensation for his 2012 performance, up from $15 million for 2011, which included a $3 million long-term incentive. Photographer: Scott Eells/Bloomberg

Goldman Sachs Group Inc. (GS:US) reached an agreement with an investor for the second straight year to drop a proposal from its annual meeting that called for an independent board (GS:US) chairman.

The investment bank instead will give expanded responsibilities to its lead independent director, James Schiro, who will set the board’s agenda and write his own letter to shareholders in the annual proxy statement, New York-based Goldman Sachs said. In exchange, shareholder CtW Investment Group will withdraw a proposal to split the roles of chief executive officer and chairman.

“We’ve had a constructive engagement with our shareholders, and believe that the enhancements we have made further solidify the independence of the board,” David Wells, a Goldman Sachs spokesman, said in an e-mailed statement.

The deal allows CEO Lloyd C. Blankfein, 58, who also has been chairman since he took control in 2006, to avoid a battle over dual roles that JPMorgan Chase & Co. (JPM:US)’s Jamie Dimon, 57, faces. That bank’s board urged investors to vote against naming a separate chairman at next month’s shareholder meeting, saying Dimon’s dual role remains the “most effective leadership model.”

Morgan Stanley CEO James Gorman, 54, and Wells Fargo & Co. (WFC:US)’s John Stumpf, 59, hold both the CEO and chairman titles. Bank of America Corp. and Citigroup Inc. have different people in the two roles.

SEC Disagrees

The Securities and Exchange Commission said last month that Goldman Sachs couldn’t omit the proposal from its annual meeting, saying it didn’t agree with the company’s claim that CtW’s idea was “inherently vague or indefinite.”

Schiro, 67, who joined the board in 2009, is the former CEO of Zurich Financial Services AG, Switzerland’s biggest insurer, and PricewaterhouseCoopers LLP. The Brooklyn, New York native was picked as lead director after the bank last year agreed to create the role in response to a similar shareholder proposal to split Blankfein’s duties.

“Schiro is very competent and able to fulfill these responsibilities, and he will be able to credibly perform his role as a check on the influence of Blankfein over the board,” said Patricia Estevez, a senior corporate governance analyst at CtW. “That’s what matters most to shareholders.”

Proposals that call for an independent chairman at other public companies have received more than 30 percent of votes supporting the measures, CtW said in a letter to the SEC in January, citing data from Institutional Shareholder Services.

Goldman Sachs awarded Blankfein $21 million in compensation for his 2012 performance, up from $15 million for 2011, which included a $3 million long-term incentive. The firm had a 10.7 percent return on equity last year, and the shares rose (GS:US) 41 percent.

Reuters reported the agreement earlier today.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $164.8 USD
    • 1.38
    • 0.84%
  • JPM
    (JPMorgan Chase & Co)
    • $55.8 USD
    • 0.24
    • 0.43%
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