If I were a shareholder of a major financial institution? You bet that I'd want an independent chairman overseeing operations.
For a few years now, some JP Morgan Chase shareholders have wanted to split the offices of chairman and chief executive officer, held by Jamie Dimon. In 2012, 40% of shareholders voted to have the offices split. This year? In a victory for Dimon, the support for splitting the offices fell to 30%.
As noted by Jessica Silver-Greenberg in yesterday's New York Times, the (non-binding) shareholder resolution was positioned as a way to improve the bank's governance, but "it soon became tangled up in how Mr. Dimon handled last year’s trading blowup. The surprising loss at the chief investment office unit in London felled some of Mr. Dimon’s top lieutenants and helped lay bare broad risk and control weaknesses throughout the vast bank." (Full article, here)
Dimon's victory didn't come easily -- a lot of intense lobbying was involved, according to an earlier New York Times article by Silver-Greenberg and Susanne Craig:
At its Park Avenue headquarters, JPMorgan assembled a war room where executives kept close tallies as shareholder votes began streaming in, according to two people briefed on the matter. To sway investors, these people said, influential board members were paired with large shareholders....
Reports say, however, that as little as two weeks ago, the resolution was on the verge of winning. The bank lobbying swung into high (fear) gear, warning that Dimon might leave, that the bank stock price would therefore be deeply damaged, and so on. The real turning point, Silver-Greenberg and Craig reported, came when "an influential shareholder advisory firm" recommended that shareholders blame the bank's directors:
In a scathing 33-page report, the firm faulted three directors, saying they lacked risk expertise. By zeroing in on the board members, several people close to the bank said, the advisory firm effectively gave shareholders an alternative. They could register their dissatisfaction with JPMorgan without going after Mr. Dimon....
I don't blame Dimon for pulling out all the stops to hold onto the power base he's built. I don't even really blame the shareholders for falling for the scare tactics.
But the victory for Dimon wasn't just that; it was a defeat for good corporate governance.