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"The peasants are revolting!"
"You said it. They stink on ice."
So goes the famous dialogue between Mel Brooks and Harvey Korman in the comedy classic History of the World: Part I. Now imagine the same exchange between Goldman Sachs' (NYSE: GS ) Gary Cohn and Lloyd Blankfein, as Cohn delivers the news that shareholders are trying to get a proposal on the proxy ballot to split the roles of chief executive officer and chairman of the board at Goldman -- both of which Blankfein now holds.
Can you be more specific?
The Wall Street Journal is reporting that CtW Investment Group -- which represents unions with $200 billion in assets and more than 5 million members -- is the voice calling on Goldman for an independent chairman, specifically "one who hasn't been an executive officer of Goldman and hasn't had other affiliations or connections with the bank."
CtW reportedly sent Goldman a letter on Dec. 13 requesting the proxy ballot measure, and on Dec. 16, Goldman in turn sent a letter to the Securities and Exchange Commission asking that the measure not be allowed "on the grounds that [the proposal] is 'vague.'" A similar proposal actually made it onto Goldman's 2010 proxy ballot, but shareholders rejected it.
The times, they (hopefully) are a-changing
Goldman isn't the only bank facing such shareholder revolts. Morgan Stanley (NYSE: MS ) recently beat a shareholder attempt to get a similar proposal onto its 2013 proxy ballot; in that case, the SEC allowed the bank to keep it off because "the shareholder making the proposal couldn't satisfy minimum ownership requirements."
There's a strong case to be made to split the roles of chairman and CEO in any kind of company. As CEO, a single individual already has great power over the organization, as well as the lion's share of say-so in how the organization operates on a day-to-day and long-term basis. But when you combine that already significant authority with the position of chair -- which has the power to set the agenda of the board of directors, ultimately the final authority in a public company -- there's the potential for abuse.
Power corrupts, and absolute power corrupts absolutely. And when it comes to banks, there's just too much at stake: Witness the recent financial crash. According to the Journal, splitting up the role of CEO and COB is more common in the U.K. than here in the U.S; it's time we followed their lead -- for the sake of shareholders, as well as the rest of us.
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