Skip to main content
Mar 11, 2013

SEC rejects Goldman Sachs’ attempt to head off proxy vote

US regulator rejects argument that filing by investor CtW is ‘too vague’

The SEC has rejected an attempt by Goldman Sachs to block a shareholder proposal that would force the investment banking giant to separate the roles of CEO and chairman, which have both been held by Lloyd Blankfein since 2006.

‘We are unable to conclude that the proposal is so inherently vague or indefinite that neither the shareholders voting on the proposal, nor the company in implementing the proposal, would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires,’ the SEC writes in response to a petition by Goldman Sachs to avoid the proxy vote. ‘Accordingly, we do not believe Goldman Sachs may omit the proposal from its proxy materials.’

Late last year Goldman Sachs shareholder CtW Investment Group submitted the proposal that would force the investment bank to find an independent chairman, saying it would improve oversight of management and enhance communications and relations with shareholders.

‘In our view, the chairman should be an independent director to promote the robust oversight and accountability of management, and to provide effective deliberation of corporate strategy, something we believe is difficult to accomplish when the most senior executive also serves as the board’s leader,’ CtW wrote in a letter to the SEC dated December 13, 2012.

The filing by CtW could have wider implications for the US investment banking industry, where all the major investment banks – except Bank of America and Citigroup – have combined the roles of chairman and chief executive officer. The proposal also comes as investors push for similar moves at other high-profile companies, including Walt Disney, where Robert Iger holds both roles. In January the SEC ruled against a similar investor proposal to split the roles of chairman and CEO at JPMorgan

In defining independence, CtW said a chairman cannot have had a financial relationship with Goldman Sachs valued at more than $100,000 annually in the last three years, been employed by a public company at which a Goldman Sachs executive serves as a director, or be a direct relative of a Goldman Sachs director.

Goldman Sachs argued in a letter to the SEC that the CtW filing was too vague. The bank said the proposal inadequately defined how it would measure ‘the last three years’, how it would define a ‘business relationship, and whether the limit of $100,000 a year refers to net profit, revenue or some other accounting or financial measure.’

‘Given the lack of clarity, shareholders, in voting on the proposal, and the company, in implementing it, necessarily would have to make numerous and significant assumptions as to what exactly the proposal contemplates,’ Goldman Sachs wrote.