Wall Road large Goldman Sachs was urged to separate its CEO and chairman roles held by embattled czar David Solomon — and to slash his gargantuan compensation bundle.
Glass Lewis and Institutional Shareholder Service, two influential proxy advisers, made the suggestions in separate stories forward of Goldman’s annual shareholders assembly this month.
An unbiased chair “is sort of all the time preferable to having a single particular person lead each the board and the manager staff,” Glass Lewis wrote on Thursday, reiterating its advice from final 12 months as a matter of excellent company governance.
Solomon’s management has come underneath scrutiny lately over a series of missteps, together with the funding financial institution’s ill-fated foray into shopper lending in addition to its failed bank card partnership with Apple.
Goldman has additionally been beset by an exodus of talent as Solomon has consolidated his place whereas potential successors have left the agency.
“Our Governance Committee wants the pliability to find out the most effective construction for our agency,” a Goldman spokesperson advised The Put up.
“They made clear {that a} sturdy lead unbiased director, alongside the Chairman-CEO function, is the simplest at the moment.”
When requested in regards to the agency’s opposition to the pay packages for Goldman executives, the financial institution’s rep advised The Put up: “Our compensation program displays our pay-for-performance tradition and incentivizes long-term shareholder alignment with out undue emphasis on shorter-term outcomes.”
Glass Lewis objected to the salary raises doled out last year to Solomon and different Goldman executives — even because the agency suffered the most important droop in earnings in 4 years.
Solomon was given a 24% pay elevate this 12 months. He’ll be incomes $31 million — of which $2 million might be in base wage and $29 million will come within the type of variable compensation.
Compensation for Goldman’s high three executives jumped by an average of nearly 24% for 2023, whereas profit fell 24%, in response to firm filings.
John Waldron, Goldman’s chief working officer, pulled down a pay bundle of $30 million final 12 months — or 28% in comparison with the 12 months earlier than.
“This doesn’t instill a way of optimism that the continued disconnect will see enchancment within the close to time period,” Glass Lewis stated in its advice.
“Given these elements, we imagine that shareholders might fairly withhold help from this proposal at the moment.”
Within the wake of the 2008 monetary disaster, efforts to separate the chair and CEO roles grew to become flashpoints on the annual conferences of Goldman Sachs and different Wall Road giants like JPMorgan Chase as traders appeared to enhance threat oversight.
Banks fended off these calls by making different adjustments, akin to giving new powers to a lead unbiased director, which Goldman did in 2013.
Traders’ deal with potential conflicts of curiosity has been revived recently, Tony Carideo, president of The Carideo Group, a company elections inspection service.
“Shareholders see it as an ‘company downside’ the place the CEO has pursuits and a chair might have completely different pursuits,” Carideo stated.
The joint positions are a standard characteristic at US banks and don’t pose a priority, stated Mark Narron, a senior director at Fitch Scores.
Nevertheless, “it’s most likely incrementally optimistic to separate these roles,” he added.
ISS cited Solomon’s checkered management and the financial institution’s technique in making its advice to separate the CEO and chairman roles.
“Solomon’s foray into the patron realm has been met with missteps and steep losses, which appear to have trickled into additional human capital points,” ISS wrote within the report on Wednesday.
Its evaluation marks a change from final 12 months, when ISS really useful towards the measure and stated on the time there have been “no important issues relating to the corporate’s governance practices.”
On Wednesday, an organization spokesperson cited the financial institution’s advice to vote towards the unbiased chair proposal outlined in its proxy assertion.
The decision to separate Goldman’s chairman and CEO titles was filed by the conservative-leaning Nationwide Authorized and Coverage Middle. The same measure it filed final 12 months received simply 16% help.
Goldman’s annual assembly is slated for April 24. Like ISS, Glass Lewis really useful votes approving all of the financial institution’s director nominees, together with Solomon.
The financial institution appointed David Viniar, who served as its finance chief from 1999 to 2013, as its subsequent unbiased lead director. He’ll succeed Adebayo Ogunlesi, who will step down on the annual assembly.
Goldman shares closed down 1.9% at $406.25.
With Put up wires
