Haraz N. Ghanbari/Associated PressJamie Dimon, the chief executive and chairman of JPMorgan Chase.
12:01 p.m. | Updated
TAMPA, Fla. — Jamie Dimon, the nation’s most powerful banker, can hold onto his title of chairman after JPMorgan Chase’s shareholders decisively defeated a proposal to split the two top jobs.
The vote to split the roles of chairman and chief executive — both of which have been held by Mr. Dimon since 2006 — received only 32.2 percent of shares voted. That is down from a vote of roughly 40 percent in support of a similar proposal last year.
All 11 directors of the bank’s board were also re-elected.
Shares of JPMorgan were up more than 2 percent in midday trading.
The votes were a convincing show of shareholder support for Mr. Dimon and the board even amid persistent questions about the bank’s controls and its dealings with regulators. Those questions have emerged after a multibillion-dollar trading loss in the bank’s chief investment office in London surprised investors last year.
The few notes of disapproval by shareholders came in the weak vote totals for the three directors who serve on the board’s risk policy committee. One of them, Ellen V. Futter, who was the only director not to attend the meeting in Tampa, barely eked out a majority, receiving about 53 percent of voting shares.
The two other directors on the committee did just a little better: James S. Crown received about 57 percent of the vote; David M. Cote got 59 percent.
The three directors had been singled out for criticism by the influential shareholder advisory firm, Institutional Shareholder Services.
In comparison, Mr. Dimon received 98 percent of the vote for the board, while Lee R. Raymond, the lead director on the board, received 95 percent.
The shareholder vote on the proposal for an independent chairman was closely watched and provided some uncomfortable scrutiny of Mr. Dimon’s leadership.
Yet some industry analysts have said that a vote in support of Mr. Dimon was assured by the complexity of JPMorgan Chase. A vote to divest Mr. Dimon of the chairman title might have prompted him to walk away, threatening to disrupt the rosy stream of profits the bank has earned for three years.
JPMorgan’s Trading Loss
Tuesday’s meeting caps an exceptionally tumultuous year that saw Mr. Dimon and his top executives working to contain the damage from the botched credit bet.
JPMorgan first announced the losses from a soured bet made by traders in the bank’s chief investment office in London last May. Since then, Ina R. Drew, who headed the unit, resigned, JPMorgan’s board clawed back more than $100 million in compensation from the traders at the center of the botched bets and
Mr. Dimon testified before Congress to account for the mishap.
The trading loss and a series of run-ins with regulators fueled a campaign to have an independent chairman to bolster oversight of the bank’s controls and to provide a strong counterweight to Mr. Dimon.
Adding to the momentum to split the roles, some shareholders said, was the fear that Mr. Dimon, known for his forceful personality, did not have enough people at the bank that could rein him in. Mr. Dimon’s confidantes who helped him navigate through the financial crisis have left the bank, including James E. Staley, a former head of the investment bank. Those who remain at the bank are mostly younger executives, many of whom are in their 40s.
The shareholder vote is a setback for investor groups who have long argued that by separating the role of chairman and chief executive, investors are better served in the boardroom. The move, shareholders argue, is aimed at creating stronger, independent boards, to keep management in check. Amid rising shareholder clout, some companies have been moving to split the role of chairman and chief executive.
JPMorgan and board members had run an unusually proactive campaign to avert the split. To help bolster its credibility, JPMorgan’s board, led by Mr. Raymond, a former chief executive of Exxon Mobil, reduced Mr. Dimon’s pay by more than 50 percent in January, to $11.5 million.
In March, the directors redoubled their support for Mr. Dimon, indicating in a proxy filing that he should keep the chairman and C.E.O. titles, and urging shareholders to vote against the proposal to split them. “The board has determined that the most effective leadership model for the firm currently is that Mr. Dimon serves as both,” the board said in the proxy filing.
The strategy helped to head off a showdown in Tampa. Still, a number of Wall Street insiders have suggested the board could have undercut the momentum to split the roles by giving more power to Mr. Raymond, the board’s lead director, while shaking up the board’s risk policy committee, which has been criticized for a lack of oversight. Instead, the board continued to support the risk policy members even over cries from shareholders to oust some directors.
JPMorgan, some industry observers argue, could have taken a page from Goldman Sachs’s playbook, which successfully scuttled a similar proposal this year by working behind the scenes to reach a deal with certain shareholders.
Under the agreement, Goldman enhanced the powers of James J. Schiro, its lead director. Mr. Schiro will set the agenda for the board, instead of merely approving it, and he will write his own letter to shareholders in the proxy statement.
In addition, Goldman’s board will increase the number of meetings of the independent directors. Those meetings would exclude Goldman’s chief executive, Lloyd C. Blankfein, and other firm executives.
As the vote fast approached, Mr. Dimon told some shareholders that he would consider leaving the bank, according to various attendees who spoke on the condition of anonymity. That admission was a central factor in some investors’ decision since it raised the possibility that the bank would reel in Mr. Dimon’s absence.
Now newly reaffirmed at the helm of JPMorgan Chase, Mr. Dimon faces a range of challenges. The bank’s relationships with regulators, once the best on Wall Street, have frayed amid concerns about faulty risk controls and oversight. At least eight federal agencies are investigating the bank.
In the latest salvo, the Federal Energy Regulatory Commission is weighing a crackdown against the bank for its energy trading activities, according to company filings.
Article source: http://dealbook.nytimes.com/2013/05/21/jpmorgan-seen-to-defeat-effort-to-split-top-2-jobs-at-bank/?partner=rss&emc=rss
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