Goldman Sachs CEO and Chairman Roles Should Be Separated, Says Proxy Adviser ISS

Goldman Sachs Faces Pressure to Separate CEO and Chairman Roles

On April 24th, top proxy adviser Institutional Shareholder Services (ISS) recommended that Goldman Sachs undertake a separation of the CEO and chairman roles currently held by David Solomon. The recommendation cited the need for "more independent oversight" to benefit shareholders.

Challenges in the Consumer Realm

ISS highlighted Solomon's involvement in the consumer realm, noting that the bank's operations in this area had incurred significant losses. The report pointed out that several high-profile executives, including the former heads of the consumer and fintech unit, global banking and markets, and asset management, have departed from the firm.

Goldman Sachs has been scaling down its consumer business following substantial financial losses, raising concerns about the impact on human capital within the organization.

Shareholder Recommendations and Concerns

In addition to the call for separating the CEO and chairman roles, ISS also recommended votes in favor of all of the bank's director nominees. However, it cautioned that support for the bank's executive pay should be approached carefully, expressing concerns about the compensation program's heavy reliance on discretion.

The report also emphasized that the issue of leadership independence in banks has been a significant point of discussion since the 2008 global financial crisis. Solomon has been serving as CEO since 2018 and took on the additional role of chairman in the following year.

Response and Board Changes

Goldman Sachs issued a recommendation against the independent chair proposal in its proxy statement. However, the bank announced the appointment of David Viniar, a former finance chief of the firm, as its next independent lead director, succeeding Adebayo Ogunlesi, who will step down at the annual meeting.

Despite Viniar's extensive experience and independent status under ISS standards, there have been questions about the decision to elevate a former Goldman executive to this role at the present time.

David Viniar, who has been a member of Goldman's board since January 2013, is set to take on the responsibilities of the lead director as the firm faces pressure to address the concerns raised by ISS and shareholders.