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Goldman's Blankfein staying put

By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- Goldman Sachs Lloyd Blankfein secured a much-needed victory at the company's annual shareholder meeting Friday -- winning the support of his investors.

Shareholders largely voted against a proposal aimed at stripping Blankfein of his role as chairman. According to preliminary results released by Goldman Friday afternoon, only 19.1% voted in favor of separating the chairman and CEO roles.

Goldman Sachs: 7 power players
Lloyd Blankfein, Fabrice Tourre and 5 other Goldman Sachs managers appeared on Capitol Hill to defend the company's mortgage market moves.

Heading into the meeting, there was speculation that Blankfein's job might be in jeopardy given that the company is now facing civil from the Securities and Exchange Commission and the severe decline in the company's stock recently.

That sentiment permeated Friday's investor meeting at times. More than once during the three-hour event, vocal shareholders requested Blankfein either give up his chairmanship or step down entirely.

"I have no intention of doing that now," he said, facing several hundred shareholders, journalists and company staff.

Other shareholders spoke out in his defense, citing the firm's recent performance. Last fiscal year, Goldman (GS, Fortune 500) earned record profits of $13.4 billion.

"Why is everybody on the bandwagon about pulling Mr. Blankfein out? He is doing a very good job. He doesn't have to step down," said one Goldman shareholder, whose remarks were met with applause from the audience.

Blankfein has become the target for much of the criticism directed at Goldman since the federal government charged the firm three weeks ago with defrauding investors on the sale of a mortgage-related security.

Last week, he and six other current and former Goldman executives endured a nearly 11-hour Senate hearing last week that laid bare the company's day-to-day dealings.

Speculation has been growing that the company may soon attempt to strike a settlement with regulators in order to put the problem behind the firm.

Speaking to reporters after the meeting, Gary Cohn, the company's president and chief operating officer, declined to say if talks were underway but hinted that the firm was open to the idea.

"There are a myriad of opportunities out there and I won't rule any of them out," Cohn said.

Unlike last week's hearing in Capitol Hill, Friday's meeting drew scant attention from shareholder activists. Just under a dozen protesters gathered outside of Friday's meeting in lower Manhattan, demanding that Goldman disclose all of the money the company spent on elections and on lobbyists.

That recommendation failed to pass, but still managed to garner significant support from shareholders, collecting 37% of the votes.

Inside the meeting, shareholders quizzed top management about a variety of issues including its selection of former Wal-Mart (WMT, Fortune 500) CEO Lee Scott as a company board member as well as when the firm might start raising its dividend.

The discussion also drifted to broader issues now facing the firm and the financial industry, including its compensation practices and greater transparency on derivatives, a subject that is being considered by Congress as it undertakes financial regulatory reform.

Looking comfortable and confident Friday, Blankfein appeared to have little difficulty addressing such hot-button issues.

He also did not hesitate to tackle the tough question about whether the government's charges and continued bad press would make it difficult to hold onto its customers.

"I would say our business has held up quite well due to the support we have gotten from our clients," he said.

More than anything, Blankfein seemed intently focused on rebuilding the firm's tarnished reputation and providing greater transparency to its various constituencies, including clients, shareholders and the general public.

In his opening remarks, he said that the company planned to establish a business standards committee, which would enact a rigorous review of the firm's operations.

"We understand there is a disconnect between how we view ourselves and how the broader public perceives us," Blankfein said. "To address this, we need a rigorous self-examination."

--CNNMoney.com senior producer Alex Nelson contributed to this report. To top of page

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