Chairman and CEO Proposed as Separate Roles
The American Federation of State, County and Municipal Employees has filed proxy proposals intended to divide the roles of chairman and chief executive at Goldman Sachs Group Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and seven other companies. The idea is to put new life into a leadership issue that analysts predict will be one of the hottest in corporate governance. Unions and other shareholder activists have previously won a few competitions asking for “independent chairmen” as a means of reinforcing corporate oversight, but the opposing votes have not allowed many changes in executive titles. However, AFSCME could change that. They were an early supporter of other reforms like the “Say on Pay” votes now mandatory of major U.S. companies following financial crisis.
Companies are usually against these proposals and some like Exxon Mobil Corp (NYSE:XOM) have even defeated similar independent chair measures in the past. Last year when confronted, the company’s board responded, “The Board must retain the flexibility to determine the particular governance structure the Board believes will best serve the long-term interests of shareholders at the time.
Lisa Lindsley, director of capital strategies, said U.S. companies should accept the independent chairman standard to ensure chief executives cannot run wild.” The financial crisis shows there hasn’t been enough adult supervision of CEOs,” she said.
Lindsley also talked about the collapsed brokerage firm MF Global. It was led by Jon Corzine serving as both chairman and chief executive until its October 31 bankruptcy filing. Corzine once also held both positions at Goldman Sachs. “We’re not saying that Jamie Dimon or Lloyd Blankfein should resign from their firms. We’re just saying they shouldn’t be chair of their boards,” Lindsley said.