J.P. Morgan Chase Chairman and CEO Jamie Dimon can keep both his jobs
after just 32 percent of shareholders voted Tuesday in Tampa, Fla. for a
non-binding measure that would have advised the global financial giant to split
Last year, 40 percent of shareholders voted for the measure. In six prior annual meetings where Dimon has been both chairman and CEO, shareholders have been asked about separating the roles four times.
The news sent the bank's stock up 2 percent, or $1.09, to $53.38 in midday trading. The stock is at its highest level in 12 years.
Experts argued yesterday that J.P. Morgan Chase could have faced an "erosion" in investor confidence if the crucial shareholder vote allowed the 57-year-old Dimon to keep both jobs.
"It comes down to a trust issue. Jamie Dimon's stellar reputation has been tarnished with the entire 'London whale' debacle," said Andrew Stoltmann, a Chicago-based securities attorney. "It makes it look like the company is Jamie Dimon's to do with what he wants, and that's not what you want in today's market."
Dimon was dealt a blow yesterday when California pension fund Calpers, which owns nearly 13 million J.P. Morgan shares, once again voted in favor of the split. Dimon has come under fire after the massive losses -- nearly $6 billion and climbing -- that resulted from credit default swap positions purchased by trader Bruno Iksil in J.P. Morgan's London office.
Lev Janashvili, managing director of corporate governance research firm GMI Ratings, said despite arguments that Dimon is a "larger-than-life figure who's uniquely qualified to lead the company," the dual position creates apparent conflicts of interests.
"It's really the equivalent of letting students grade their own papers -- it just doesn't work well," he said. "It probably doesn't give shareholders an accurate view of the state of the business and doesn't provide sufficient incentives to push it as much as it reasonably can towards better performance."
Notable Bay State business leaders who share both titles include Jay Hooley of State Street Corp.; Joe Tucci of EMC Corp.; Bill Swanson of Raytheon Corp.; and Ronald Sargent of Staples Inc.
Charles Elson, director of the University of Delaware's John L. Weinberg Center for Corporate Governance, said the potential split shouldn't stem from Dimon's actions, but instead an ongoing trend that also involves the bank's competitors, Bank of America and Citigroup.
"Why should the person being monitored chair the group monitoring them?" Elson said. "Nothing against Mr. Dimon at all, but a good CEO ought to be left to the business of running the company and allowing the board to run itself."
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