Jamie Dimon and the 10 other directors of JPMorgan Chase take the stage in Tampa on Tuesday, to face shareholders who can take comfort in a rising stock price and a prospering bank. But those same shareholders may also deliver a humbling rebuff to Dimon and the bank?s board.
If shareholders vote to separate the jobs of chairman and chief executive ? positions that Dimon has held since 2006 ? it would signal a shift in the balance of power in corporate America, an inflection point in shareholders? push for greater say in the boardroom.
Shareholder protests at large companies are usually successful only at those that are troubled or whose stock price has disappointed.
But JPMorgan, even after suffering a multibillion-dollar trading loss that exposed weak risk controls and spurred federal investigations, is minting profits quarter after quarter. And its stock price is up 19% this year. A victory against a bank that prides itself on its ?fortress balance sheet? would go a long way toward proving that shareholders can push for changes even at strong companies.
?It?s a fascinating moment in the arc of corporate governance, where shareholders are poised to get a lot of power,? said Charles M Elson, director of the John L Weinberg Center for Corporate Governance at the University of Delaware.
Raising the stakes, of course, is the presence of Dimon, the brash chief executive who successfully piloted JPMorgan through the tumultuous 2008 financial crisis. For better or for worse, Dimon, 57, has come to epitomise the American banker atop an institution that is too big to fail. If JPMorgan shareholders reject the proposal ? which would not require the bank to act in any case ? it will be a powerful endorsement of Dimon and his leadership. In addition, it will help JPMorgan, which has been aggressively working behind the scenes to avert defeat, to move beyond the fallout from the trading loss.
Regardless of the outcome of the fight, it is likely that the JPMorgan board will make some changes, possibly by shaking up its risk committee or giving its lead director greater power.
Last week, shareholder groups sponsoring the split were cut off from crucial preliminary vote tallies by the firm that provides them, causing the sponsors to cry foul.
New York State?s attorney general, Eric T Schneiderman, late on Friday sent a letter to Stephen M Cutler, JPMorgan?s general counsel, that raised serious concerns about why the tallies were cut off, according to two people with knowledge of the matter.
After a series of conference calls on Saturday between lawyers for JPMorgan and the attorney general?s office, JPMorgan agreed to direct a firm that provides early tabulations to restart the tallies.
For investors who argue that an independent chairman is a vital counterbalance to a chief executive, defeat of the resolution would be a significant setback.
After receiving the backing of 40% of shares for a similar proposal last year, a small group of JPMorgan shareholders was emboldened to introduce a new resolution in February. Since then, support for splitting the positions has grown, stoked in part by revelations of JPMorgan?s continued regulatory missteps.
A Senate hearing and a 300-page report on the multibillion-dollar trading loss at the bank?s chief investment office in London last year accused the bank of misleading investors and regulators about the botched trades.