In the annals of shareholder activism, what happened at the Goldman Sachs meeting on Friday was just a footnote. But footnotes are often worth reading.
Hank Paulson, Goldman's CEO, came under fire for the firm's environmental policies -- not as a corporate predator despoiling the earth, but for saving it at shareholders' expense. Steven Milloy, an executive at the Free Enterprise Action Fund, had claimed that Goldman's policies are anti-growth, harmful to shareholders and designed to advance Mr. Paulson's personal causes. He objected to Goldman's gift of 680,000 acres in Chile to the Wildlife Conservation Society, calling it a conflict of interest because Mr. Paulson is chairman of the Nature Conservancy, which works with the society, and has a daughter, Merritt, who sits on the society's board of advisors. (Mr. Paulson's post as chairman emeritus of the Peregrine Fund, which saves birds of prey, seems an altogether more useful interest for a CEO and did not figure in Mr. Milloy's complaint.)
According to several accounts, Mr. Paulson batted away the charges with a simple defense: The board did it, not me. He was not even part of the discussions of the Chilean land deal. Mr. Milloy's proposal got a minuscule portion of the vote. No harm, no foul; end of story.
But there is foul, and there may be harm. Leaving aside the merits of Goldman's environmental policy -- I am all for saving planet earth, but still am not sure Goldman should unilaterally allocate shareholder assets to the cause -- Mr. Milloy raised serious concerns. It's ludicrous to suggest that Goldman's board acted alone, as if directors didn't know of Mr. Paulson's involvement with the conservancy or his advocacy of environmental causes. No one who makes it into the board room of a place like Goldman is unfamiliar with the time-honored strategy of gaining influence by showing interest in the CEO's interests, be they golf or global warming. Why wouldn't directors rubber-stamp Mr. Paulson's green causes?
Furthermore, while corporations are increasingly giving strategically, to positively affect their business, CEOs still hold sway. Much corporate philanthropy is far more aligned with their social ambitions than with shareholder interests. There are no studies to prove this, of course. But the society pages hold a clue: It's the CEO who is toasted at benefits and photographed for posterity. How often is the source of the funds -- the pockets of shareholders -- even mentioned?