Goldman should separate chairman and chief executive roles, proxy adviser ISS says, in challenge to David Solomon

By Steve Gelsi

Institutional Shareholder Services says shareholders would gain from 'more independent oversight' of having a separate chair

Institutional Shareholder Services is recommending shareholders vote in favor of a measure to separate the chairman and chief executive officer roles currently held by Goldman Sachs Group Inc.'s David Solomon in a challenge to the big bank's leadership.

Weighing in ahead of the Goldman Sachs (GS) annual meeting on April 24, ISS cited Solomon's decision to move into the consumer business and then lose billions once it pared down the business last year as evidence that the company should change its governance structure, the report said.

"Shareholders would benefit from more independent oversight, in the form of an independent chair," ISS said in its proxy analysis, which was initially reported by Reuters.

ISS also cited employee turnover at Goldman Sachs, after Solomon reportedly said the bank hasn't managed to meet its goals to include women in its most senior ranks.

"Solomon's foray into the consumer realm has been met with missteps and steep losses, which seem to have trickled into further human capital issues," ISS said, according to the report.

ISS endorsed a shareholder proposal in Goldman Sach's proxy statement from the National Legal and Policy Center to require that two separate people hold the office of chairman and chief executive.

The resolution cited a survey by Spencer Stuart Board Index in 2022 that revealed 57% of companies in the S&P 500 have separated the chief executive and chairman role, up from 51% in 2017.

"The growing separation of the CEO and chair positions signifies the changing sentiment toward chair independence," the resolution said.

ISS said the shareholder proposal from National Legal and Policy Center "presents an opportunity for shareholders to convey a preference for the leadership structure which provides the most robust form of independent oversight of management."

A Goldman Sachs spokesperson referred to the bank's proxy statement, which recommends shareholders vote against the resolution.

"A combined chair-CEO structure provides our firm with a senior leader who serves as a primary liaison between our board and management and as a primary public face of our firm," Goldman Sachs said on page 21 of its proxy statement. "This structure demonstrates clear accountability to shareholders, clients and others."

Goldman reviews its board leadership structure every year.

"If at any time our governance committee determines it would be appropriate to appoint an independent chair, it will not hesitate to do so," the bank said.

The National Legal and Policy Center filed a similar resolution last year, when it received approval from 16% of votes cast.

Solomon became chief executive in 2018 and added the chairman title the following year.

Goldman Sachs stock dipped fractionally on Thursday.

Goldman Sachs stock has risen by 7.2% in 2023, compared to a 4.2% rise by the Dow Jones Industrial Average DJIA and a 9.9% gain by the S&P 500 and an 11.5% rise by the Financial Select SPDR Fund XLF.

Also read: Goldman senior banker Stephanie Cohen departs for strategy role at Cloudflare

-Steve Gelsi

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04-04-24 1121ET

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