As Goldman Sachs prepares for its annual shareholder meeting on Friday, it has more to worry about than anti-corporate gadflies like Evelyn Y Davis.

Davis, a frequent critic of corporate America's pay and business practices, is expected to be on hand. But her concerns could be drowned out by other small shareholders likely to question Goldman Sachs Group Inc executives about fraud charges, a criminal investigation and other shareholder challenges.

I'm sure there will be some protesters outside and all of that good stuff, said Walter Todd, a portfolio manager at Greenwood Capital, which owns Goldman debt. I'm sure it'll be good theater. But as far as inside the meeting, I would image there will be some folks asking tough questions.

With all the scrutiny that Goldman faces, this year is not like the others -- apart from the likelihood major shareholders are likely to sit out the annual meeting.

As a result, Goldman executives are more likely to be dodging headlines then any corporate reform efforts with teeth.

People are looking for headlines coming out of this thing, Todd said. It doesn't matter if it is a mom and pop who owns five shares going in and raising a stink, or if it is Calpers -- the headline is still going to be what it is.

Goldman has faced a headline assault of late.

Last month, the U.S. Securities and Exchange Commission accused Goldman of failing to tell investors the securities underlying a so-called synthetic collateralized debt obligation were chosen by a short-seller, John Paulson, whose fund was betting the CDO would lose value.

Goldman also drew the attention of a Senate and is facing a Justice Department criminal investigation, according to sources.

QUESTIONS, QUESTIONS

Chief Executive Lloyd Blankfein has been engaging in a public relations offensive since he was questioned last week by the Senate Permanent Subcommittee on Investigations about the firm's role in the subprime mortgage crisis.

Blankfein's fate is not on the agenda of Friday's meeting, but some are speculating he will not survive the scrutiny facing the firm.

You almost need a guy to hang. Blankfein is probably going to get hung, said one investor, who did not want to be named because he did not want to jeopardize business relationships. Everybody is feeling this. I don't know if the people inside are upset with Lloyd, but outside, he is not a sympathetic figure.

In addition to questions about whether Blankfein is fit to lead the firm, Goldman executives are likely to face questions about the merits of the SEC's lawsuit and the associated risks.

I'd like to know what they think the true probabilities are of being found guilty in the ABACUS deal, said Michael Vogelzang, president of investment firm Boston Advisors, which owns a small stake in Goldman. I'd like to ask them: 'Did they really think they weren't doing anything wrong? Would you have bought the paper personally?'

Like most shareholders, Vogelzang is not planning to attend the meeting, which will be held in Downtown Manhattan at a building near Goldman's new headquarters.

Shareholders in attendance will be able to vote on proposals relating to compensation issues, political contributions and even an item by The Maryknoll Sisters of St. Dominic relating to the use of collateral in derivatives trading.

They will also consider a proposal urging the company to separate the role of chairman and CEO. Goldman's board, however, has recommended a vote against that proposal.

(Reporting by Steve Eder; editing by Andre Grenon)

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