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The 1 percent blinks: AFSCME, Goldman Sachs reach compromise
Updated On: Mar 29, 2012

The union flexes its shareholder muscle to achieve a new 'lead director' at the investment firm

Washington, DC —

AFSCME is flexing its muscle with the 1 percent from the inside.


The Wall Street-based mega investment banking and securities firm Goldman Sachs has announced a compromise with the national union that will see the firm appoint a new "lead director." In return, Goldman Sachs Chief Executive Officer and Board Chairman Lloyd Blankfein will continue to maintain both of those titles.


AFSCME, which holds shares via employee pensions in Goldman Sachs accounts and others, has been pushing for corporate reform through the shareholder proxy process with several firms. At Goldman Sachs, the union had been pushing for a vote at the firm's annual meeting in May to replace Blankfein as chairman. While Goldman Sachs shareholders voted down a similar proposal in 2010, Wall Street insiders gave the proposition a 50-50 chance of succeeding this year. That worried Goldman Sachs executives enough to cut the deal.


The compromise was less than what the union set out to achieve, but AFSCME International's Lisa Lindsley says it's an important first step.


"We thought it was progress, but we realize their culture has a long way to go," said Lindsley, who is the union's union's Director of Capital Strategies and, as such, oversees AFSCME's pension plan investments.


AFSCME has targeted nine companies this year, including Goldman Sachs, with shareholder resolutions to split the top jobs. Responses have varied, according to Lindsley. For example, J.P. Morgan Chase & Co. has essentially ignored the request. Others, including Johnson & Johnson and Anadarko Petroleum Corp., have made "positive" changes, though not enough changes to warrant the union dropping the proxy proposals.


Here are some links to give you different perspectives on this issue:


The original AFSCME International news release outlines the union's position.


The Wall Street Journal was the first to report on the compromise agreement.


The Reuters News Service is among many others that has its own take on the situation.


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