AFSCME Eyes Dual Chairman-CEO Roles At JPMorgan, Goldman

Union Eyes Dual Chairman-CEO Roles At Goldman, JPMorgan Chase

* Union seeks to cut CEO power at JPMorgan, Goldman, others

* Independent chair hottest governance issue in 2012 - analysts

By Ross Kerber

Jan 17 (Reuters) - An influential public-sector labor union has filed proxy proposals aimed at separating the roles of chairman and chief executive at Goldman Sachs Group Inc, JPMorgan Chase & Co and seven other big companies, officials told Reuters.

The move, by the American Federation of State, County and Municipal Employees, will put new energy into a smoldering leadership issue that analysts expect to be among the hottest in corporate governance at annual meetings this spring.

Unions and other shareholder activists have in prior years won a few contests calling for "independent chairmen" as a way to strengthen corporate oversight. But the advisory votes have not led to many shifts in executive titles.

That could change with renewed focus on the issue by AFSCME. The 1.6 million-member union was an early backer of other reforms that later gained traction such as the "Say on Pay" votes now required of major U.S. companies after the financial crisis, and of rules making it easier for shareholders to nominate their own directors.

While AFSCME has raised the issue before, this year's effort targets more companies than in the past and comes as support for such measures, while still a minority, appears to be growing. Coming after the financial crisis, the effort is likely to rachet up pressure on JPMorgan, Goldman Sachs and the seven other companies to make changes.

Paul Hodgson, spokesman for corporate governance research firm GMI in New York, said he expects some of this season's sharpest debates to arise around the independent chairman issue.

"There's certainly some significant push-back from shareholders who have been calling for companies to implement this for some time now," he said.

Companies in the United Kingdom already are required to separate the two leadership roles. Hodgson said the change gives non-executive board members more power. Currently, "If the chair of the board is also the CEO, you don't go to him and say you're unhappy with the CEO," Hodgson said.

Another backer of independent chairmen proposals has been New York City Comptroller John Liu, who oversees pension funds with $115 billion in assets. Aides to Liu said his office has filed two such proposals for the 2012 proxy season and plans a third in the fall. Allowing a CEO to serve as a board chair "can compromise a board's ability to carry out its most fundamental responsibility, which is to independently oversee management," Liu said in a statement Monday.

Companies typically argue against such proposals, and some of the companies targeted by AFSCME this year have defeated similar independent chair measures in the past. When AFSCME pressed for an independent chairman at Exxon Mobil Corp last year, the company's board responded that "the Board must retain the flexibility to determine the particular governance structure the Board believes will best serve the long-term interests of shareholders at the time," according to its proxy filing.

The measure was defeated, with 69 percent of votes "against" and 31 percent of votes "for."

Still, the effort is gaining ground. Proposals for independent chairmen last year averaged 33 percent support at Russell 3000 companies, up from 28 percent the year before, according to proxy adviser Institutional Shareholder Services.

AFSCME oversees a pension plan with $850 million in assets. The labor union's members also include elected leaders of public pension plans holding more than $1.7 trillion, many of which file their own proposals every year.

Officials said AFSCME has filed independent chairman proposals at nine companies this season, up from four last year, and to encourage other shareholders to file similar measures. Companies can seek permission from the SEC to skip the measures, or reach settlements to omit them from their annual proxy ballots mailed to shareholders.

AFSCME has also filed measures at other companies requiring reports on their lobbying spending and tax risks. Its campaigns are overseen by Lisa Lindsley, director of capital strategies.

In an interview she said U.S. companies should adopt the independent chairman standard to make sure chief executives cannot run wild.

"The financial crisis shows there hasn't been enough adult supervision of CEOs," she said.

Lindsley mentioned the case of collapsed brokerage firm MF Global, which until its Oct. 31 bankruptcy filing was led by Jon Corzine serving in both the chairman and chief executive roles. Corzine once also held both roles at Goldman Sachs, she noted.

"We're not saying that Jamie Dimon or Lloyd Blankfein should resign from their firms," she said, referring to the current leaders of JPMorgan Chase and Goldman Sachs, who both hold dual chairman and CEO roles. "We're just saying they shouldn't be chair of their boards," Lindsley said.

Lindsley said AFCME chose its list of nine companies based on factors like stock performance relative to peers and their other governance practices.

A spokesman for Goldman Sachs declined to comment. A spokesman for JPMorgan Chase & Co said executives would not comment until its official proxy material is filed.

At other companies where AFSCME filed an independent director proposal, spokespeople also said they could not yet comment or declined to comment. They included representatives of American Express, Anadarko Petroleum, Dean Foods , Johnson & Johnson, Northern Trust and Lockheed Martin.

AFSCME has also filed its proposal at Janus Capital in Denver. The fund company already has a separate chairman, Steve Scheid, and chief executive, Richard Weil. Lindsley said Scheid is not truly independent since he himself was once CEO.

A Janus spokeswoman, Jane Ingalls, said the company is considering AFSCME's proposal. She added that company Chair Steve Scheid is considered "independent" under the rules of the New York Stock Exchange, where its shares trade. (Reporting By Ross Kerber; Editing by Steve Orlofsky)

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