JPMorgan’s Jamie Dimon survives vote to strip him of chairman role


NEW YORK – Jamie Dimon survived a bruising fight to strip him of his chairmanship, but directors at JPMorgan Chase & Co. may still have to calm restive shareholders.

Dimon, JPMorgan’s savvy chairman and chief executive, easily beat a proposal to split the roles following a stunning trading loss a year ago. The nation’s biggest bank reported Tuesday that 32% of shareholders endorsed the measure, according to a preliminary tally. That’s a sharp drop from the 40% who supported stripping Dimon of his chairmanship last year.

Still, three board members overseeing risk-management policy garnered relatively slim majorities for reelection, a sign of widespread discontent. Corporate governance experts said the JPMorgan board would still need to assuage shareholders.


“I wouldn’t pop the champagne on this one — the board has some real thinking to do,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Businesses need to move with near unanimity between owners and the managers.”

Lee Raymond, JPMorgan’s presiding director, hinted the bank may shake up the board’s committee overseeing risk management. He told one questioner at the bank’s annual meeting in Tampa, Fla.: “You should stay tuned.”

Raymond said the board would digest the shareholder votes and decide how to proceed after careful analysis. “We are very mindful of what we’ve heard,” he said.

JPMorgan has been under fire since the bank disclosed an embarrassing episode last year involving risky bets by a trader nicknamed the “London Whale.” The losses amounted to more than $6 billion.

Tuesday’s marquee vote was seen as a referendum on Dimon’s leadership and as a potential harbinger of growing shareholder power in corporate decision-making. In recent years, a growing number of companies have adopted policies requiring an independent chairman, considered by some to be a “best practice.”

The proposal wasn’t binding, but Dimon nonetheless dodged what would have been a potentially stinging rebuke for one of the most influential leaders in corporate America. During the financial crisis and its aftermath, Dimon emerged as Wall Street’s chief spokesman in Washington.

Reports surfaced that Dimon might leave the bank were he to lose his chairmanship, fueling worry on the part of his supporters in the financial industry. Dimon is credited with steering JPMorgan through the worst of the financial crisis unscathed, and delivering record profits.

Wall Street was heartened by Dimon’s victory. JPMorgan’s stock gained 73 cents, or 1.4%, to $53.02 in Tuesday trading.

“It’s a big relief,” said Erik Oja, a banking analyst at research firm S&P; Capital IQ. “It’s a really well-run bank. Even despite the ‘London Whale’ losses, when you look at the bottom line they had a record year in 2012.”

The losses barely dented JPMorgan’s profit, but they nonetheless sparked a firestorm on Wall Street and on Capitol Hill.

On Tuesday, Dimon again struck a humble note: “This episode not only cost us money but was extremely embarrassing, opened us up to some of your criticism, damaged our reputation and resulted in litigation and investigations that are still ongoing,” he said.

The episode rekindled fears of the financial crisis and renewed calls for tougher regulation on the country’s largest banks. They also highlighted how even the strongest of institutions, led by one of corporate America’s most venerated chieftains, could succumb to management blunders.

Who will replace Dimon was an issue raised Tuesday. Raymond said the bank had been identifying potential successors but said he hoped Dimon’s departure was “much into the future.”

“And I have no illusions that we will be able to clone Jamie,” Raymond said.

The proposal to separate the chairman and chief executive roles was sponsored by the American Federation of State and County Municipal Employees, the public employee union. It was joined by large institutional investors, including the agencies overseeing New York City’s and Connecticut’s public employee pensions.

Many large institutional investors support the independent chairman measure on principle: that corporate managers essentially should not be their own bosses.

The country’s two largest public pension funds — the California Public Employees’ Retirement System and the California State Teachers’ Retirement System — voted to split the CEO and chairman jobs for that reason.

CalPERS, for instance, said it voted its shares to split the jobs because it believes an independent chairman “may be able to exercise stronger oversight of management.”

CalPERS took a stronger stand against three JPMorgan directors. The pension said it withheld votes for board members David Cote, James Crown and Ellen Futter “due to failures in risk oversight” resulting in the Whale losses.

According to preliminary results Tuesday, Cote won 59.3% of the shareholder vote, Crown won 57.4% and Futter only 53.1%. Other board members won more than 90% support. Final results were to be filed later with the U.S. Securities and Exchange Commission.

A declining majority of companies in the Standard & Poor’s 500 index have combined CEO-chairman jobs. But according to Oja, only four of the top 20 largest U.S. banks have split the roles. Two of those that separate the roles are Citigroup Inc. and Bank of America Corp., two of the more troubled major banks.

Despite the defeats of the JPMorgan shareholder pushes, the votes should serve as a wake-up call to the bank to address risk oversight and management issues, said Matt Orsagh, a corporate governance expert at CFA Institute in New York.

“No one wants to be back here next year with the same thing happening,” Orsagh said.

And despite the defeats, the sizable results for proponents are hopeful signs of growing shareholder influence in corporate America.

“We’re moving in the right direction of engagement,” Orsagh said.