Tin ear, again

Goldman Sachs seems determined to ride roughshod over its shareholders. It’s true the bank’s stock is close to nudging back above the book value — a sign that owners are getting more comfortable with the balance sheet and earnings power. But, with its new appointment to lead director, Goldman’s management and board are showing a startling disregard for decent corporate governance.

Just last week the firm persuaded the American Federation of State, County and Municipal Employees (AFSCME) to withdraw a proposed shareholder vote next month to separate the roles of chairman and chief executive. But, the bank did so simply by changing the title of its top board member from presiding director to lead director, maybe throwing in a few extra duties for good measure.

That stitch-up is now being followed by a smackdown. Goldman is giving the job to the wrong guy. This was the ideal chance to appoint someone unquestionably independent with a reputation for asking tough questions. James Schiro doesn’t fit the bill.

For starters, he has already been a Goldman director since 2009, so it’s pretty hard to call him wholly independent. Given the circumstances, new blood would have been preferable.

Second, while Schiro was chief executive of PricewaterhouseCoopers between 1998 and 2002, the Securities and Exchange Commission discovered all sorts of breaches of auditor independence rules, including one where Schiro himself owned stock in a company PwC audited. Schiro was never charged with wrongdoing, but it does leave his judgment in question.

What’s more, while on Goldman’s board, Schiro has served as head of the audit committee, presiding over the firm’s relationship with its accounting firm. It happens to be his old employer, PwC. That doesn’t necessarily mean any impropriety, but it’s just one more in a litany of conflicts of interest that Goldman simply can’t resist.

Perhaps, Schiro will prove a strong lead director. But, he doesn’t sound like the kind of candidate AFSCME had in mind when it conceded to the firm’s superficial changes last week. Moving again to get one over on shareholders shows just how much Goldman still doesn’t get it.