Jamie Dimon keeps his dual role at JPMorgan
Jamie Dimon scored a big win at JP Morgan Chase’s annual shareholders meeting on May 21, fending off an effort by activist investors to split the roles of chief executive and chairman at the investment banking behemoth.
Only 32 percent of votes cast supported a resolution to split the dual responsibility that Dimon has held for the past seven years, down from 40 percent at last year’s annual meeting. Last year, the bank’s mishandling of disclosures around a $6.2 billion trading loss in London was fresh in investors’ minds, while a 60 percent increase in the stock price over the past 12 months and record earnings reported for 2012 undoubtedly have helped temper their passion for change at the top.
The fact that Dimon prevailed was a Pyrrhic victory, however, according to Charles Elson, head of the Weinberg Center for Corporate Governance at the University of Delaware's business school.
‘He did a very effective job. He won the battle. I don’t think he’s won the war,’ says Elson. ‘After that kind of vote, I think you need to do some soul-searching. A lot of money was spent, but you still had a third of shareholders vote against [Dimon keeping both roles].’
Elson says he wishes the vote had focused on the issue, not the personalities. His concern is that it became a referendum on Dimon’s leadership when it should have been about the governance principle of splitting the top responsibilities. ‘It’s a good principle,’ he says. ‘Bank of America has done it, Citigroup has done it.’
Three members of the risk committee of JPMorgan’s board fared less well than Dimon, receiving less than 60 percent of votes cast and down dramatically from last year. Long-serving independent board member Ellen V Futter, who is president of the American Museum of Natural History, got just 53 percent of the vote, versus 86 percent a year ago. Proxy advisory firms Institutional Shareholder Services and Glass Lewis both recommended shareholders withhold their votes from Futter and two fellow members of the risk committee, James S Crown and David M Cote; and both also urged shareholders to vote in favor of separating the CEO and chairman roles.
While the meeting was in progress, presiding director Lee Raymond told shareholders to ‘stay tuned’ for possible changes to the board's risk committee, as reported by the Wall Street Journal on May 21. The composition of the 11-member board as a whole is likely to change over the next year as well, some observers think, based on two members being over the recommended retirement age of 70, including Raymond, and other factors.
Separating the CEO and chairman positions is a trend whose time has come, says Elson.
Originally, boards were invested with an advisory role, so it made sense that the chairman of this group be the person being advised. ‘When the board is a monitoring body, it doesn’t make sense to have the person being monitored chair the board,’ he says.