Three risk panel members win reappointment with bare majorities after London Whale losses
Jamie Dimon will continue to serve as both chairman and chief executive officer of JPMorgan after just under a third of shareholders voted for him to give up the dual role at the company’s annual shareholder meeting.
Just over 32 percent of shareholders voted in favor of the resolution that sought to force Dimon out of the chairmanship role and ban the dual role that critics say has led to lax oversight at the bank. Even as proxy advisory firms and activist shareholders campaigned for the resolution this year, Dimon fared better than he did last year – when 40.1 percent of shareholders voted for a similar resolution.
At the same time, the board’s risk oversight team met growing opposition, with one director, Ellen Futter, the president of the American Museum of Natural History, gaining reappointment with just 53.1 percent of the vote, down from 86 percent last year. Committee member James Crown, president of Henry Crown, won 57.4 percent of the vote and Honeywell CEO James Cote, also a member of the risk panel, took 59.3 percent. In last year’s vote, both Cote and Crown won 97 percent support.
The vote came amid growing pressure on the bank to take action after the $6.2 bn so-called London Whale derivatives loss the bank suffered last year. After the vote, CtW Investment Group, which supported the proposal to force Dimon to relinquish his dual role along with proxy advisory firms ISS and Glass Lewis, called on the three directors on the risk panel to quit.
‘A no vote north of 40 percent is a vote of no confidence,’ says William Patterson, emeritus executive director of CtW, according to the Wall Street Journal. ‘A divided shareholder vote is not a mandate.’
Despite the passing vote, the risk panel may still face changes, with JPMorgan lead director Lee Raymond telling investors at the meeting that ‘in terms of the composition of the risk committee, you should stay tuned,’ according to Bloomberg News.
Citing an unidentified person familiar with the issue, Bloomberg also reports that the vote could prompt the bank to give more authority to Raymond to offset Dimon’s dual role, and possibly split the roles when Dimon eventually resigns.
Though not binding, the vote on the dual role was seen as a test case for the US investment banking industry, where all major investment banks except Bank of America and Citigroup have one person holding both roles. Goldman Sachs, which faced rising pressure to force Lloyd Blankfein to relinquish one of his two roles this year, reached a deal with CtW to avert a vote on the issue by offering the lead independent director greater influence on the board.
