The big challenge for Wall Street CEOs this spring: keeping both of their jobs

Even if these proposals succeed, researchers are skeptical that separate jobs make companies better.

• Goldman Sachs, BlackRock, and Bank of America all face similar shareholder proposals this year.
• Some investors want to split up the dual CEO-chairman role, so one person can't have all the power.
• Even if these proposals succeed, researchers are skeptical that separate jobs make companies better.

A trio of top Wall Street bosses is facing investor agitation this spring over their jobs.

Investors at Goldman Sachs, BlackRock, and Bank of America have proposed splitting up the CEO-chairman roles held by David Solomon, Larry Fink, and Brian Moynihan, respectively, in this year's slate of shareholder proposals. The attempts to add more independent oversight to the firms' boards of directors is a public rebuke to those CEOs.

Proxy advisors — the firms that recommend how big shareholders vote — typically want different people in the CEO and board chair roles to lessen perceived conflicts of interest. Last week, top proxy firms Glass Lewis and Institutional Shareholder Services recommended Goldman and BofA separate their CEO-chair jobs. A UK activist fund is pushing for the same at BlackRock, the world's largest asset manager.

In annual meeting materials, Goldman, BlackRock, and BofA urged investors to vote against the change.

A cyclical history of splitting CEO and chairman roles

These proposals cycle in and out of fashion, and Wall Street has seen plenty of similar ballot questions, from shareholders large and small. Most of them have been voted down or led to short-term changes.

BofA, for example, separated the CEO-chair role under shareholder pressure in 2009 but, five years later, recombined the job for Moynihan. The bank again faces a shareholder proposal to separate Moynihan's roles, in a rehash of a similar vote that failed in 2015.

Last year, almost 14% of S&P 500 companies received shareholder proposals to separate the CEO and chair roles, up from 6% in 2021, per data provider ISS-Corporate. The proposals have averaged about 30% support. BlackRock supported such a proposal in 2020 at Exxon, but the measure failed.

Over the last few decades, US companies have increasingly separated the jobs. But splitting the roles "is not unambiguously positive" for companies' performance, wrote Stanford Graduate School of Business researchers in a 2016 paper.

The Stanford researchers tracked board changes at 100 of the largest and 100 of the smallest publicly traded companies in the 20 years ending in 2016. They found that a third of the companies, including BofA, separated the chair-CEO roles and later combined them during the 20-year period.

Large companies — like the trio of Wall Street firms now — were targeted much more often for shareholder proposals to split the jobs than the small companies. In the 20-year period, 56 of the 92 large companies faced at least one shareholder proposal to add an independent chair. Only three of the 95 smaller companies did.

"This suggests that the companies that shareholders target to advocate for independent board leadership might not necessarily be those with the most egregious governance problems but instead those that are the most visible public targets," the Stanford researchers wrote.