Proxy advisers advocate segregation of CEO and Chair responsibilities at Goldman Sachs

Glass Lewis, a prominent proxy adviser, has joined another advisory firm in advocating for the separation of the CEO and chairman roles at Goldman Sachs, currently held by David Solomon. Additionally, Glass Lewis diverged from management’s stance by urging shareholders to oppose the bank’s executive compensation plans. These recommendations coincide with Solomon’s efforts to downsize Goldman’s consumer operations, which, despite his initial support, have incurred substantial losses.

Emphasising the benefits of an independent Chair, Glass Lewis reiterated its suggestion from the previous year that having separate individuals lead the Board and executive team is generally preferable. Following the 2008 financial crisis, there was a push from investors to enhance risk oversight by separating the Chair and CEO positions, a trend observed not only at Goldman Sachs but also at other major financial institutions like JPMorgan Chase. While some banks implemented changes such as empowering a lead Independent Director, the issue of potential conflicts of interest inherent in combining the roles remains a focal point for investors.

Although joint CEO and Chairman positions are common in US banks, concerns regarding such consolidation persist among some industry experts. Solomon assumed the CEO role in 2018 and added the Chairman title a year later. ISS highlighted Solomon’s leadership and the bank’s strategy in advocating for the separation of these roles, citing missteps and significant losses incurred in Goldman’s consumer ventures. Despite Goldman Sachs’ resistance to the proposal, advocating for the Board’s flexibility in determining the firm’s structure, Glass Lewis and other stakeholders are pushing for change.