Goldman Sachs Preserves Blankfein’s Dual Role

(Corrects spelling of Spar’s first name in the sixth paragraph of story published March 27.)

Goldman Sachs Group Inc. (GS) won’t face a union challenge to Lloyd C. Blankfein’s dual role as chairman and chief executive officer after agreeing to appoint an independent board member as “lead director.”

“We think it’s a step in the right direction,” said Lisa Lindsley, the Washington-based director of capital strategies at the American Federation of State, County and Municipal Employees, which she said owned 7,101 Goldman Sachs shares when the union filed a proposal to split Blankfein’s roles. She said AFSCME and Goldman Sachs reached the compromise, reported earlier today by the Wall Street Journal, on Feb. 6.

The lead director’s responsibilities include presiding over board meetings when the chairman is absent, leading the annual CEO evaluation and acting as liaison between independent board members and management, according to a description posted on Goldman Sachs’s website. John H. Bryan, a former Sara Lee Corp. (SLE) CEO who has served on Goldman Sachs’s board since November 1999, had some of those responsibilities as presiding director.

“Right now it looks like it’s John Bryan,” Lindsley said when asked who would be named lead director. “But I think that there may be some changes in the board composition.”

Bryan, who turned 75 in October, is required by the firm’s corporate governance guidelines to retire by the next annual shareholders meeting unless the board requests that he stay.

Goldman Sachs, the fifth-biggest U.S. bank by assets, is holding a meeting of directors this week in India, the first time the board has convened there. The firm, which has 12 directors, last year added M. Michele Burns, the former chairman and CEO of Marsh & McLennan Cos.’s Mercer human-resources consulting unit, and Barnard College President Debora L. Spar.

‘Constructive Talks’

“We appreciated the constructive talks we had with AFSCME,” David Wells, a spokesman for Goldman Sachs in New York, said in an e-mailed statement.

AFSCME, the largest public employee and health-care workers’ union in the U.S., hasn’t dropped its effort to split the chairman and CEO roles at other companies including JPMorgan Chase & Co. (JPM), the biggest U.S. bank, Lindsley said.

The change at Goldman Sachs didn’t assuage all of the union’s concerns, some of which Greg Smith, a former derivatives salesman, highlighted in a March 14 New York Times op-ed, Lindsley said. Smith wrote that he was quitting after almost 12 years at the firm and that the company’s culture of putting clients first has eroded under Blankfein and President Gary D. Cohn, who also sits on the board of directors. Blankfein, 57, and Cohn, 51, said that most employees disagree and that the bank would investigate Smith’s assertions.

“Our members are participants in state and local government pension plans that are clients of Goldman Sachs,” Lindsley said. “And so as clients I think we’re concerned that the culture of Goldman is not only averse to the best interests of shareholders but it’s averse to the interests of clients.”

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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