Tuesday, August 31, 2010

Nut Job Activists Want Blankfein Replaced

Yesterday, I posted on the WSJ analysis of how new SEC rules will make it easier for radical activists to harass corporate America and politicize the leadership of corporate America.

Now, Crain's New York reports that Goldman Sachs is the number one target of activists:
Goldman Sachs is target No. 1 for activist investors looking to shake up corporate boards now that the Securities and Exchange Commission has made it easier for shareholders to nominate directors.

Corporate governance activists are looking to replace Goldman directors at the firm's annual meeting next spring unless the board strips Chief Executive Lloyd Blankfein of his position as chairman.

A campaign against the Goldman board “is definitely something worth looking at,” says Julie Tanner, assistant director for socially responsible investing at Christian Brothers Investment Services in New York, who last spring introduced a shareholder resolution at Goldman's annual meeting to oust Mr. Blankfein as chairman. “We could nominate our own candidates to the board because we question, as do other investors, why the current board leadership has taken no action in light of what's happened at Goldman recently.”...

A senior official at a union pension fund said last week that Goldman's board is the prime target for investors looking to flex their muscles under the new SEC rule.

In addition, activists are busy identifying companies that have consistently rebuffed their challenges. Contested elections are possible at coal mining company Massey Energy, whose reputation has been damaged by a fatal explosion in a West Virginia mine, and at Pulte Homes, which has seated directors even though a majority of shareholders declined to vote for them.

“Everything's just in the planning stages now,” says Brandon Rees, deputy director at the AFL-CIO's office of investment. “But a lot is going on behind the scenes.”
There's no chance that activists are going to put a person on the Goldman board, but the harassment will intensify.

What's scary about these activists is that while Goldman continues to play footsie with government for its own advantage, the activists aren't interested in stopping this dirty dealing. They just want to re-direct the cash flow in their direction. Goldman is a tough firm to defend, but if activists somehow gain a foothold or influence at Goldman, they will apply their model in a more aggressive fashion across corporate America.

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