Wall Street giant Goldman Sachs has been asked to separate the CEO and chairman roles held by embattled czar David Solomon and cut his huge pay.
Leading proxy advisory firms Glass Lewis and Institutional Shareholder Services made the recommendation in a separate report ahead of Goldman’s annual shareholder meeting this month.
Glass Lewis on Thursday reiterated a recommendation from last year as a matter of good corporate governance, writing that an independent chair is “almost always preferable to having a single person lead both the board and the management team.” .
Mr. Solomon’s leadership has come under intense scrutiny in recent years over a series of missteps, including the investment bank’s ill-fated foray into consumer finance and a failed credit card partnership with Apple.
Goldman has also been plagued by a talent exodus as potential successors leave the firm while Mr. Solomon consolidates his position.
Glass Lewis opposed pay increases given to Mr. Solomon and other Goldman executives last year, even as the firm suffered its biggest profit slump in four years.
Mr. Solomon was given a 24% raise this year. He will earn $31 million, of which $2 million will be in base salary and $29 million in variable compensation.
Compensation for Goldman’s top three executives increased by an average of nearly 24% in 2023, but profits fell by 24%, according to Goldman’s filings.
Goldman Chief Operating Officer John Waldron had his pay package cut by $30 million last year, or 28% from a year earlier.
“This does not instill optimism that the ongoing disconnect will improve in the near future,” Glass Lewis said in the recommendation.
“Given these factors, we believe shareholders may reasonably refrain from supporting this proposal at this time.”
After the 2008 financial crisis, other Wall Street giants like Goldman Sachs and JPMorgan Chase & Co.’s annual meetings have seen efforts to separate the roles of chairman and CEO, as investors seek to improve risk oversight. became the spark.
Banks have fended off those demands by making other changes, such as giving new powers to the lead independent director, as Goldman did in 2013.
Tony Carideo, president of the Carideo Group, a corporate election inspection service, says there has been a recent resurgence of attention to potential conflicts of interest among investors.
“Shareholders see this as an ‘agency issue,’ where the CEO has an interest and the chairman may have a different interest,” Carideo said.
Mark Naron, senior director at Fitch Ratings, said joint positions are a common feature among U.S. banks and do not cause concern.
But, he added, “separating these roles will probably become more positive over time.”
ISS cited Mr. Solomon’s checkered leadership and the bank’s strategy in recommending that the roles of CEO and chairman be split.
“Solomon’s foray into the consumer space was met with failure and huge losses, which appears to have spilled over into further human capital issues,” ISS said in a report on Wednesday.
The assessment marks a change from last year, when ISS recommended against the measure and said at the time that it had “no significant concerns regarding the company’s governance practices.”
Goldman Sachs had no immediate comment.
A company spokesperson on Wednesday cited the bank’s recommendation to vote against the independent chair proposal outlined in its proxy statement.
The resolution to split the titles of Goldman’s chairman and CEO was introduced by the conservative National Law and Policy Center. A similar bill introduced last year received just 16% support.
Goldman’s annual meeting is scheduled for April 24th. Like ISS, Glass Lewis recommended a vote to approve all of the bank’s board nominees, including Solomon.
The bank has appointed David Vinial, who served as its treasurer from 1999 to 2013, as its next independent lead director. He will succeed Mr. Adebayo Ogunlesi, who will step down at the annual general meeting.
Goldman shares were mostly flat in afternoon trading, lagging behind larger peers whose shares rose about 1%.
with post wire
