A JPMorgan Chase & Co. shareholder proposal to split the bank's chairman
and chief executive roles -- now both held by Jamie Dimon -- failed to win a
majority's support Tuesday.
The proposal to split Dimon's jobs at the nation's largest bank won only 32.2% of the votes, according to a preliminary tally announced at JPMorgan's annual shareholder meeting in Tampa, Fla.
The marquee vote was seen as a referendum on Dimon's leadership and as a potential harbinger of growing shareholder power in corporate decision-making. A similar measure last year won 40% of shareholders' support.
The proposal wasn't binding, but Dimon nonetheless dodged what would have been a potential rebuke for one of the most influential leaders in corporate America and who has in recent years served as Wall Street's unofficial ambassador in Washington. Some analysts have speculated the proposal's victory would have hastened Dimon's departure from the bank, which under his leadership has reported record profits.
Even though the proposal was defeated, it was unclear what steps JPMorgan would take to assuage shareholder concerns.
JPMorgan's board also faced pressure from shareholders. All of the board's members were reelected, according to the results, but three members who oversee risk-management won only slim majorities.
Dimon has taken fire ever since JPMorgan disclosed an embarrassing episode last year involving risky bets by a trader nicknamed the London Whale.
The losses, which totaled more than $6 billion, barely dented JPMorgan's profit, but they nonetheless sparked a firestorm on Wall Street and on Capitol Hill.
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.
Dimon has repeatedly apologized to shareholders, regulators and lawmakers. On Tuesday, he expressed humility.
"This episode not only cost us money but was extremely embarrassing, opened us up to ... criticism, damaged our reputation and resulted in litigation and investigations that are still ongoing," Dimon 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 pension funds.
The vote on last year's proposal, which which 40% support, took place just as the London Whale scandal was unfolding.
Many large institutional investors support the independent chairman measure on principle, though not as a vote on Dimon's leadership. Large institutional investors like 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.
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, while Crown won 57.4% and Futter only 53.1%. The other board members won more than 90% support.
Final results were to be filed later with the U.S. Securities and Exchange Commission.
The shareholder votes appeared to cheer Wall Street. JPMorgan's stock added $1.11, or 2.1%, to $53.40 in mid-day trading in New York.
(c)2013 the Los Angeles Times
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