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Business Comment

Stephen Foley: Blankfein may not escape a shareholder vote again


US Outlook So Lloyd Blankfein has escaped – for now. We are told that Goldman Sachs executives were seriously worried that a proposal to split Mr Blankfein's roles of chief executive and chairman might pass at the bank's annual meeting in a few weeks. To forestall that possibility, Goldman persuaded the union pension fund sponsoring the proposal to drop it from the agenda, instead offering to put a "lead independent director" on the board as a counterweight to Mr Blankfein and to represent shareholder interests.

Having spent the first part of my career writing about businesses in the UK, where combining the chairman and CEO jobs is a corporate governance no-no, it still sits oddly with me that it remains unusual in the US to split the roles. The cult of the CEO is alive and well here, even though for every Steve Jobs taking his company to wild success on the basis of his brilliant tyranny, there is a Dick Fuld boneheadedly running his company into the ground, or a Dennis Kozlowski actually looting it. (And let's not forget that even Mr Jobs allowed the dating of stock options to be manipulated to enrich his executive team.)

The case for splitting the two top jobs is obvious, and especially pressing at big banks such as Goldman, where the short-term incentives to juice bonuses through risky bets is still out of line with the kind of long-term value creation that a strategic-thinking chairman should bringing to the boardroom.

Mr Blankfein has escaped this year, but I take some comfort from Goldman's having sniffed which way the wind is blowing. Where there are shareholder votes this year, they look much more likely to pass.