Thursday, September 2, 2010

Good Move: Bess Joffe to Goldman

Now here is a smart move by Goldman Sachs to address its impaired reputation and strained shareholder relationships. The firm has hired Bess Joffe as vice president-governance, and she will join the firm's investor relations team starting on Oct. 4.

That's none too soon, as shareholder forces are already starting to mobilize for the 2011 proxy vote. Crain's New York Business has just called the firm "target No. 1 for activist investors looking to shake up corporate boards."

So Bess will have her work cut out for her. But from my recent experience in publishing her in Directors & Boards, I see her being a dynamic new asset for the firm in constructively engaging with investors on behalf of Goldman's board and management.

She will be joining Goldman from Hermes Equity Services Ltd. in London. Here is her bio note that I ran earlier this year: "She joined Hermes in 2005 to work on corporate governance and responsible investment in the Americas. In her role, she actively engages at the board level with underperforming companies that are fundamentally sound but have a variety of strategic, financial or governance issues, with the objective of helping improve long-term financial performance."

Bess was a forceful contributor on a panel discussion that Charles Elson and I organized and conducted at the Weinberg Center for Corporate Governance at the University of Delaware (where the above photo was taken). That discussion, held in November 2009, addressed the pros and cons of separating the chairman and CEO positions. The resulting article, titled "The Great Divide," appeared in the First Quarter edition of Directors & Boards.

Here is a telling comment she made in the article: "We at Hermes are responsible for protecting the interests of long-term shareholders. We recognize that different boards face different situations at different times. But shareholders need to understand with much more specificity why boards have made particular decisions at a particular time. Right now that information is really lacking."

My bet: With Bess Joffe's experience as an investor advocate, starting in October Goldman shareholders, and the financial markets in general, will start getting much more clarity into the firm's governance and board conduct. Her hiring is a signal that Goldman is getting quite serious about its needs in this area.