Goldman shareholders support Blankfein’s chairman-CEO role
Shareholders of Goldman Sachs Group Inc. overwhelmingly supported their embattled chairman and chief executive Friday, rejecting calls to split his job in two in the wake of government accusations that the company defrauded some clients.
More than 80% of those voting at the annual shareholders meeting sank the proposal even as critics took on top boss Lloyd C. Blankfein over the company’s questionable securities sales and pushed for more diversity on its board and in its senior management.
The crowd filled a theater just steps from Wall Street as dozens of protestors seeking financial reforms paraded outside Goldman offices in Manhattan. The meeting remained civil despite the pointed criticisms there.
“We thought that some of these big questions that have been asked recently would be addressed,” said Ed Grossman, a shareholder who said that he and his wife decided to come to their first meeting after seeing all the recent controversy. “We’re a bit disappointed.”
Goldman’s executives were not pressed on recent reports that the company may be seeking to settle a civil fraud lawsuit filed by the Securities and Exchange Commission or on reports that a criminal investigation is pending.
Nor did shareholders question a New York Times report Friday that one of Goldman’s major partners, American International Group Inc., may be dropping the firm as a financial advisor because of the recent controversy.
In a Senate committee hearing last week, Blankfein and other executives were grilled about their business practices and what both Democrats and Republicans called conflicts of interest for selling high-risk securities based on subprime mortgages, then secretly hedging their bets by insuring themselves against losses.
The Senate questioning revealed the depth of public anger against a company that managed to weather the financial crisis and return quickly to huge profitability.
But on Friday, Blankfein was running the meeting, and he announced the formation of a new Business Standards Committee. Blankfein promised “rigorous self-examination” because of the “disconnect between how we as a firm view ourselves and how the broader public perceives our role and activities in the market.”
Some investors stepped to the microphone to express support for his management.
“I’m a Goldman shareholder and I’m proud to say that,” Eric Reuter said.
Joshua Robertson, a job-seeking recent graduate of the University of Pennsylvania, praised the company’s pursuit of the “profit motive” and told Blankfein how many of his friends “dream one day to sit up there at that lectern.”
The most full-throated critique of the company came from leaders at religious organizations that own Goldman stock, including the Rev. Jesse Jackson of the Rainbow PUSH Coalition.
“My concern is that Wall Street is rising, citizens are sinking, states are sinking, schools are closing,” Jackson said. “You are rising, as Goldman, as Wall Street — but not linked to lending or to investment or to our sinking middle class.”
Blankfein thanked Jackson and politely agreed with the principles he expressed.
The most concrete challenge to Blankfein came in a shareholder resolution that sought to force Blankfein to drop his dual role as CEO and chairman of the board.
A similar resolution at Bank of America Corp. last year won majority support and led to the eventual resignation of Ken Lewis from his dual posts as chairman and CEO.
But the proposal at Goldman won only 19% of the votes Friday, according to a preliminary tally. Blankfein said he had no plans to step down.
Goldman has recently been working with shareholders to assuage anger at the company.
A representative from the California Public Employees’ Retirement System, the nation’s largest public pension fund, commended the company for adopting a measure that it had submitted last year on voting procedures.
And a Catholic investment company complimented Goldman’s work on climate change.
“You have carried yourself with a great deal of dignity in the midst of all this,” said Tim Smith, a shareholder activist with Walden Asset Management.
Clare Davis, the administrator of the Edward W. Hazen Foundation, said she was “pleased” that the company allowed shareholders to have an advisory vote on the compensation of top executives, but she said she worried that such steps would end once public scrutiny of the company does.
“We fear that our board compensation committee is simply waiting for public opposition to settle down so that Goldman Sachs can return to bonuses as usual,” Davis said.
