Goldman Weighs Leadership Change, Sets Union Deal

Wednesday, 28 Mar 2012 09:18 AM

 

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Senior executives within Goldman Sachs have talked about splitting the roles of chief executive officer and chairman, two sources said, although pressure for any imminent move appears to have eased after a deal with a labor union pension fund.

Proposals to separate the CEO and chairman roles have long been sought by outside groups, but two people familiar with management thinking provided the first indication that internal discussions about such a move have taken place.

Under a restructure, President Gary Cohn would take the chief executive officer role and Vice Chairman J. Michael Evans would be elevated to president, leaving current CEO and Chairman Lloyd Blankfein with only the chairman role, the two sources said. The sources declined to be identified because they were not authorised to speak publicly.

Pressure for such a move may have eased after one of the country's largest labor unions said on Tuesday it had withdrawn a shareholder proposal to split the chairman and CEO jobs after Goldman agreed to alter its board structure.

In addition, Blankfein, who has held both positions since 2006, still has powerful allies on the board and within the firm.

But a plan to split the roles is not off the table, one of the people said, and could be discussed at a board meeting that begins in India on Thursday.

Blankfein is expected to come under pressure at the meeting to explain recent high-profile incidents at the bank in which management was criticised for conflicts of interest. The firm also suffered a public scolding by former employee, Greg Smith, who wrote in an op-ed in the New York Times that Goldman's culture was toxic and the firm took advantage of clients.

The American Federation of State, County and Municipal Employees (AFSCME) said it withdrew its split proposal last month after Goldman agreed to appoint an independent lead director. The lead director would be in charge of evaluating the CEO's performance.

Putting in place a lead director "certainly doesn't go as far as we wanted," said Lisa Lindsley, director of capital strategies for AFSCME's pension plan, but it did satisfy enough union concerns to make the group willing to rescind its resolution.

Lindsley said it was a difficult battle getting Goldman to agree to the compromise.

The firm would not commit to splitting the chairman and CEO roles in the future when a successor takes over for Blankfein, Lindsley said.

"The person who's in that job wants to retain those jobs and if he gives up either one it looks like a demotion and they don't even want to commit in advance if there's a change in leadership," she said.

A spokesperson for Goldman Sachs was not available for comment outside regular business hours.

© 2014 Thomson/Reuters. All rights reserved.

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