No vote results for JPMorgan's dissident shareholders

May 17, 2013
<p>Voting progress withheld from shareholders calling for chairman and CEO roles to be split&nbsp;</p>

Investors seeking to divide the roles of chairman and CEO at JPMorgan – both currently held by Jamie Dimon – will no longer receive voting updates in advance of the bank’s AGM next week.

Broadridge, the firm keeping tabs in the JPMorgan vote, usually provides voting snapshots to both listed companies and proposal sponsors. However, following a direction last week from the Securities Industry and Financial Markets Association (SIFMA), Wall Street’s main lobby group representing brokers, only JPMorgan will be privy to the vote as it progresses.

While the final results will be announced at Tuesday’s AGM in Tampa, Florida, the pension funds leading the call for Dimon’s roles to be split says this information blackout gives JPMorgan the upper hand. ‘They have changed the rules in the middle of the game and it has created an unfair advantage,’ says Michael Garland, New York City’s assistant comptroller and head of corporate governance for the city’s pension funds, in the New York Times. ‘It’s like playing a game where only the home team gets to know the score.’

John Liu, the New York City comptroller who serves as custodian and investment advisor to public pension funds, has been vocal about his objections to the dual role in the past. ‘Any non-trivial relationship between an outside director and the company, whether it’s financial or familial, can compromise a director’s independence and willingness to challenge the CEO,’ he said in a statement. ‘These concerns are magnified when the CEO in question also serves as chair and runs the board meetings, as is the case at JPMorgan.’

Other high profile shareholders also support the vote, as do proxy advisory firms ISS and Glass Lewis, each calling on investors to back the split.

Lyell Dampeer, a senior executive at Broadridge, stresses that in this situation, the firm is simply performing its role as ‘an agent of our brokers and clients’ – which primarily involves ensuring that SEC and NYSE rules are followed.

In ‘exempt solicitation’ situations, where ‘dissident groups’ are not soliciting a proxy – such as in the JPMorgan vote – Dampeer explains that there are no SEC requirements to share voting information with any groups except the firm holding the vote. Despite this, Broadridge has provided both listed companies and dissident groups with proxy voting updates for the past five years.

Late Friday, SIFMA directed Broadridge to end this practice ‘in all cases’ – a request the company will comply with until advised otherwise. Dampeer adds that Broadridge informed the SEC and dissident groups requesting vote updates on Monday. ‘We actually had a conversation with [the SEC on Wednesday] to make sure they understood what we were doing. We didn’t receive any counter instructions.

‘We’re an agent of the brokers,’ he says. ‘We’re not a policy maker; this is not something that we have a voice or view on. When we received instructions from our clients to stop, we stopped.’

Charles Elson, director of the John L Weinberg Center for Corporate Governance at the University of Delaware, argues in the New York Times that voting updates are a ‘critical part of the process’ for both sides. ‘If you feel you need to win by shutting off information, it calls into question the strength of your arguments,’ he says.

While Tuesday’s vote is not binding for the bank, support for the proposal would be a big blow for JPMorgan and put added pressure on the board to divide the CEO and chairman roles.

JPMorgan declined to comment on the issue, while SIFMA failed to respond ahead of publishing.

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