Tue May 21, 2013
JPMorgan Chase CEO Spared By Shareholders
Originally published on Tue May 21, 2013 4:43 pm
ROBERT SIEGEL, HOST:
Jamie Dimon, the chairman and CEO of JP Morgan Chase, has beaten back the most significant challenge to his leadership since he took charge. Company shareholders turned down a proposal that would have taken away one of his titles.
But as NPR's Jim Zarroli reports, shareholders made clear they are unhappy about the performance of some board members.
JIM ZARROLI, BYLINE: Jamie Dimon is one of the titans of Wall Street but his reputation took a big hit last year after he revealed that one of the bank's trading units had racked up losses that eventually totaled more than $6 billion. At the bank's annual meeting in Tampa, today, Dimon acknowledged that the so-called London Whale incident had damaged the bank's reputation and raised questions about its leadership. But he said...
JAMIE DIMON: It would've been a terrible shame if that one issue was allowed to damage the company from doing all the great things that it continues to do.
ZARROLI: Dimon was referring to a proposal to split the positions of board chairman and CEO; he now holds both posts. But many shareholder groups believe it's just good corporate governance to keep the jobs separate. Lisa Lindsley is with the AFSCME employee pension fund, which owns shares of the bank and was one of the sponsors of the proposal.
LISA LINDSLEY: We do not see this measure as a panacea, but rather a badly needed first step to strengthen the oversight of management by the board on behalf of the shareholders.
ZARROLI: Lindsley said this was not a referendum on Dimon's leadership, but an attempt to avoid a conflict of interest. She said the CEO is supposed to be the top employee at a company, carrying out the broad strategic goals set by its board and chairman. When one person holds both jobs, she said, there's not enough oversight. And some shareholders argue that this may be why the bank has had so many regulatory problems and lawsuits lately.
But the bank fought hard to defeat the proposal and there were even hints that Dimon might resign if one of his titles was taken away. With profits strong, most shareholders didn't want to take that chance. Shareholder Andrew Pittman told Dimon he deserved praise for the way he handled the London Whale fiasco.
ANDREW PITTMAN: He took a very hard issue. He looked American populace in the face and told us, and acknowledged that the bank had made an error and that steps were being taken to prevent it again. And I found that very refreshing, frankly.
ZARROLI: Board members also notice that Dimon hadn't exactly escaped punishment. His pay was cut considerably last year and some top executives were fired. That was apparently enough for shareholders. But they found a way to express their unhappiness toward the board anyway. Three directors who sit on the board's risk committee got less than 60 percent of the vote, which is remarkably low in a corporate board election.
Critics say the London Whale incident is evidence that the committee has done a bad job of monitoring bank activities. Bank analyst Mike Mayo questioned whether the committee was up to the task of overseeing risk at a bank that has grown so complex.
MIKE MAYO: I've been doing this job full-time for 25 years. And sometimes, when I take a look at the $2 trillion balance sheet, I don't really know exactly what's going on.
ZARROLI: The vote puts pressure on the board to make changes. Presiding director Lee Raymond told shareholders that the board needed time to digest the results. But he said it would pay attention to what it had heard. And he said stay tuned for changes in the committee's makeup.
Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.