May 11, 2012 / 10:07 PM / in 6 years

Trading loss to heat up JPMorgan annual meeting

BOSTON (Reuters) - JPMorgan Chase & Co’s surprise $2 billion trading loss will embolden critics of the bank at its annual meeting next week, where some shareholders will be pushing to split Jamie Dimon’s dual role as chairman and chief executive.

“Investors will be looking for a way to send a signal to management,” said Adam Kanzer, general counsel at Domini Social Investments, a JPMorgan shareholder based in New York. “Calling for an independent chair is a direct attack on Dimon’s authority as CEO.”

Major pension funds in New York, California and Florida as well as the two leading proxy advisory firms - ISS and Glass, Lewis - are already backing the nonbinding proposal calling for a split of the jobs.

JPMorgan will hold the meeting May 15 in Tampa, Florida - far from its New York headquarters, where it might face larger protests.

The California State Teachers Retirement System, the Florida State Board of Administration and the New York State Comptroller’s office, which each oversee around $150 billion in assets, have said they will vote for the split based on general policies opposing joint CEO/chairs.

“Generally we support these kinds of proposals,” said Ricardo Duran, information officer for CalSTRS in Sacramento. “We always look kindly on the separation of those two positions.”

Officials at the Florida and New York agencies also said on Friday that they plan to support the measure.

On Friday, a day after the loss was disclosed, shocked investors sent JPMorgan’s shares down over 9 percent on Friday and fueled calls for regulators to break up the largest U.S. bank.

The $2 billion loss at JPMorgan, which damaged Dimon’s reputation as one of the savviest CEOs on Wall Street, has also fueled calls for stronger financial regulation in Washington.

Across the country, large institutional shareholders have grown increasingly restless on corporate governance questions following the financial crisis, joining forces with unions and more vocal activists who once fought lonely battles.

Support for proxy measures seeking an independent board chair has risen to 38 percent of votes on average this year so far, from 33 percent last year and 28 percent in 2010, according to proxy adviser ISS.

After Thursday’s loss announcement, a major public employee union and JPMorgan shareholder renewed its call for splitting the roles.

The American Federation of State, County & Municipal Employees said the loss helps make the case for the proxy measure it filed at the bank and eight other large companies this year calling on them to split their top jobs as a way to improve corporate oversight.

“We need an independent chairman of the board. The stakes are too high to leave Jamie Dimon unsupervised,” said Gerald McEntee, trustee of the AFSCME pension plan, in a statement.

JPMorgan argues in its proxy filing that the split is not necessary for Dimon. All other directors are independent under the rules of the New York Stock Exchange and one is designated as a “presiding director” who may call meetings of the other independent directors, the bank said.

AFSCME filed a similar proposal at Goldman Sachs & Co, but withdraw the measure in March as part of a deal in which the bank agreed to appoint an independent lead director.

The AFSCME measure at JPMorgan got support from ISS and Glass, Lewis, in addition to the pension funds.

“Ultimately we believe vesting a single person with both executive and board leadership concentrates too much oversight in a single person and inhibits the independent oversight intended to be provided by the board on behalf of shareholders,” Glass, Lewis wrote in a report on JPMorgan’s proxy.

Reporting by Ross Kerber; Editing by Aaron Pressman and Gary Hill

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below