At a time when US governance is often consumed by the highly politicised issues of climate change risk and ESG, it is an old-fashioned boardroom bugbear looming over a number of corporate giants this proxy season: whether to split the roles of chair and CEO.

The issue has, in recent weeks, made headlines for the leadership of financial giants Goldman Sachs, Bank of America and the world’s largest fund manager, BlackRock.

In each case, investors have made the argument that the roles—held by David Solomon, Brian Moynihan and Larry Fink—should be held by two different people, ostensibly because, under current arrangements, too much power is held by one person.

At the end of last week, it was Larry Fink who became the latest target, after it emerged that London-based activist investors Bluebell Capital had filed a proposal to amend BlackRock’s bylaws to require an independent chair.

The proposal argues that “there is an inherent conflict of interest for a CEO to act as her/his own oversight as chair.

‘Lack of independent oversight’

“Whilst each situation needs to be reviewed on a case-by-case basis, the lack of independent oversight within BlackRock’s board can be evidenced by the numerous inconsistencies between BlackRock’s ESG strategy and its implementation.”

Bluebell argues an independent chair is also needed because the fund manager has failed to tackle “greenwashing” and has an “oversized” board.

At Bank of America, well-known independent activist John Chevedden is pushing for separation of the roles when a leadership transition takes place. He writes that a “lead director” is no substitute for an independent board chair.

“With the current CEO serving as chair this means giving up a substantial check and balance safeguard that can only occur with an independent board chair.”

At Goldman Sachs, the request for an independent chair comes from the National Legal and Policy Centre, a think tank focused on ethics in public life. Its proposal argues the roles of CEO and chair are “greatly diminished when held by a singular company official, weakening its governance structure”.

It will come as no surprise to find all three company boards recommend a vote against these proposals.

BlackRock’s response says Larry Fink holding both CEO and chair positions is the “most appropriate and effective leadership structure” for the board.

It adds that Bluebell “fails to consider that a one-size-fits-all approach to board leadership may not suit each company’s circumstances”. It says that “oversight” is achieved by a board “of which the vast majority of directors are independent, as defined by NYSE listings standards”.

The combined CEO and chair figure head has been a point of pain for many investors. Some have even declared a vote against all such leaders in their portfolios in the past.

Last year ISS, the proxy advisors, said one in four S&P 500 companies received a shareholder proposal to split the two top roles among different personnel. Half of those came from John Chevedden. ISS says at the time combining the roles took place at fewer than half the companies listed in the US and was generally “in decline”.

New York governance monitoring group, the Conference Board, said in January that 36% of the S&P 500 had an independent chair, a proportion which hadn’t changed since 2021. Combined roles were present at 44% of the S&P 500 while average shareholder support for separation stood at 30%.

With a substantial number of companies holding onto their combined CEO-chair, the issue is likely to remain top of the list for many activists. But investors love a winner. Unless combined role holders are seen to be fundamentally flawed, they are likely to retain support.