NEW YORK – Jamie Dimon, chairman and CEO of the country’s biggest bank, faces a key test this week: His shareholders are voting on whether to let him keep both jobs.
It’s been just more than a year since his bank, JPMorgan Chase, revealed a surprise trading loss that tarnished its usually stellar reputation in Washington and on Wall Street, and what a difference it has made. Shareholder groups are calling for the bank to strip him of his chairman job, a move that would be a bruising referendum against a man who’s normally chieftain even among other big-bank CEOs. They’re also lobbying to kick out multiple long-time board members, saying they should have done more to detect or prevent the trading loss.
In all, it’s a powerful reminder of how fortunes can quickly shift in the banking industry, and how banks, supposedly chastened by the financial crisis, are still stumbling through regulatory and legal crises.
Today, at the bank’s annual meeting in Tampa, Fla., union group AFSCME, the New York City Comptroller’s Office and other fund managers will ask bank shareholders to approve a proposal asking JPMorgan to split the roles of chairman and CEO, and to give the chairman job to someone who isn’t a bank employee. The idea is to install stricter checks and balances against Dimon and other top bank executives.
A similar measure got 40 percent approval at last year’s meeting, which was held just days after the bank announced the so-called London whale loss. In the previous six annual meetings where Dimon has been both chairman and CEO, shareholders have been asked about separating the roles four times, and last year marked the highest level of votes in favor of the idea. In 2007 and 2008, only about 15 percent of shareholders voted for similar measures.
Even a Master of the Universe can be swallowed by a London whale, said AFSCME president Lee Saunders. The loss is nicknamed for the location of the trader who made the outsized bets on complex debt securities that went wrong, eventually losing the bank $6 billion.
Both Glass Lewis and Institutional Shareholder Services, two influential firms that give advice to big shareholders, are recommending that the jobs be split. Glass Lewis is also recommending getting rid of six of the 10 independent board members, and ISS recommends booting three.