- Goldman Sachs, BlackRock and Bank of America all face similar shareholder proposals this year.
- Some investors want to split the dual roles of CEO and chairman, so that one person cannot hold all the power.
- Even if these proposals succeed, researchers remain skeptical that job separation makes companies better.
A trio of top Wall Street bosses are facing investor unrest over their jobs this spring.
Investors from Goldman Sachs, BlackRock and Bank of America have proposed splitting the CEO-chairman roles held by David Solomon, Larry Fink and Brian Moynihan, respectively, in this year’s slate of shareholder proposals. Attempts to add more independent oversight to corporate boards are a public rebuke of these CEOs.
Proxy advisors – companies that recommend voting by large shareholders – generally want different people in the roles of CEO and board chairman to reduce perceived conflicts of interest. Last week, major proxy firms Glass Lewis and Institutional Shareholder Services recommended that Goldman and BofA separate their CEO positions. A British activist fund is lobbying for the same at BlackRock, the world’s largest asset manager.
In their annual meeting materials, Goldman, BlackRock and BofA urged investors to vote against the change.
A cyclical history of separating the roles of CEO and chairman
These proposals come and go out of style, and Wall Street has seen many similar ballot questions from shareholders large and small. Most of them were rejected or resulted in short-term changes.
BofA, for example, separated the role of CEO and chairman under shareholder pressure in 2009, but, five years later, recombined Moynihan’s position. The bank is again facing a shareholder proposal to separate Moynihan’s roles, in a similar vote that failed in 2015.
Last year, nearly 14% of S&P 500 companies received shareholder proposals to separate the CEO and chairman roles, up from 6% in 2021, per data provider ISS-Corporate. Proposals averaged about 30% support. BlackRock supported such a proposal in 2020 at Exxon, but the measure failed.
In recent decades, American companies have increasingly segregated jobs. But the distribution of roles “is not unambiguously positive” for business performance, researchers at the Stanford Graduate School of Business wrote in a 2016 paper.
Stanford researchers tracked board changes at 100 of the largest and 100 smallest publicly traded companies over the 20 years ending in 2016. They found that a third of the companies, including BofA , separated the roles of chairman and CEO and then combined them over the past 20 years. the period of 20 years.
Large companies – like the trio of companies on Wall Street today – have been targeted by shareholder proposals to divide jobs far more often than smaller companies. Over the 20-year period, 56 of 92 large companies faced at least one shareholder proposal to add an independent chairman. Only three of 95 small businesses have done so.
“This suggests that the companies that shareholders are targeting to advocate for an independent board are not necessarily those with the most egregious governance problems, but rather those that are the most visible public targets,” wrote the Stanford researchers.
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