Goldman’s new lead director better as chairman

July 25, 2014

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Goldman Sachs has found the right man for the half-right job. The bank tapped Adebayo Ogunlesi to be its new lead director. The former head of client coverage for Credit Suisse might not be the most obvious candidate. For example, he has never led a public company. On balance, though, he’s a good choice. If only Goldman saw fit to call him chairman.

Understanding the intricacies of running a business with thousands of stakeholders is a useful skill when running a board. Various regulators and distinct sorts of shareholders can be considerably different to manage than at a private firm. It’s why so many board bosses are former chief executives and chairmen themselves, including Goldman’s departing lead director, James Schiro, who was CEO of PricewaterhouseCoopers and Zurich Financial Services.

Ogunlesi is at least used to dealing with some of the demands of investors from his time heading up Global Infrastructure Partners, a buyout firm he started in 2006. His two years on Goldman’s board thus far also will have given him insights into the bank’s own quirks. He has a reputation for inspiring fierce loyalty – a fair number of his Credit Suisse colleagues followed him out. That may help foster camaraderie among the independent directors, a considerable advantage when dealing with hard-charging bankers.

Three decades of industry experience should come in handy, too. Ogunlesi knows how to manage egos and his time running investment banking and client coverage at Credit Suisse complement the trading backgrounds of CEO Lloyd Blankfein and President Gary Cohn.

What’s missing is the proper title. Goldman, along with many U.S. companies, prefers to let the CEO serve as chairman of the board that is meant to oversee him. Some argue that lead independent director and chairman is a distinction without a difference. In rare instances that might be true, but on the whole it’s simply poor corporate governance.

Protests from small but vocal shareholders have prompted Goldman in recent years to throw a bit of extra power in the direction of its lead director. That’s as good as far as it goes – just like the Ogunlesi decision.

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