It should be no surprise that Jamie Dimon won his bid to keep both the chairman and chief executive titles at JPMorgan Chase. The company and lead director Lee Raymond, himself a retired chairman and CEO of Exxon, lobbied shareholders hard. Dimon implied he might resign if he lost the chairman’s job. Scholars at the Stanford Graduate School of Business, looking at 20 years of data, put out a report claiming that splitting the two roles had little effect on stock price or future performance. Considering that relatively few major U.S. corporations separate the jobs — a practice corporate governance experts advise for proper checks on management power — this survey may be limited, but no matter. Most of all, JPM shares have been on a steady climb for the past year.
In the end, it wasn’t even close, even though Institutional Shareholder Services Inc. and Glass Lewis & Co., influential advisory firms to institutional investors, supported stripping Dimon of the chairman’s job and unseating directors on the risk committee. The resolution itself received 32 percent support from shareholders who voted, down from 40 percent for a similar resolution in 2012. Dimon himself received 98 percent of the vote for the board. And for all the sturm und drang leading up to today’s annual meeting in Tampa, the resolution was non-binding. The bank was not required to implement it.
On top of the stock price and the clubby group-think of boards and institutional investors, Dimon still has his aura. He ably led the bank through the worst financial crash since the Great Depression. He extended its national retail franchise by purchasing the good part of Washington Mutual during the crisis. Perhaps as important, he has tremendous influence in Washington and has probably been the most effective individual in keeping the Dodd-Frank “re-regulation” weak, championing the big banks and gutting an effort that would have put tighter controls on derivatives. Against all this, the $2 billion London Whale trading loss is not much when assayed by the big institutions that vote most of the bank’s shares. In addition, the board whacked Dimon’s compensation as penance, the head of the division responsible for the loss was forced out and some $100 million in compensation to the traders was clawed back. This is more accountability than many big companies provide.
On the other side of the scale is Dimon’s considerable ego. He is often the smartest person in any room; he always thinks he is the smartest person in every room. This is the man who failed to provide adequate controls for the Whale gambling and then initially called it “a tempest in a teapot.” Characteristically, today in Tampa he said, “We try to admit our problems, fix them and move on.” Then he declined to comment on the alleged manipulation of Libor, the financial rates benchmark, which has prompted multiple investigations. JPM was among the banks subpoenaed last year in the scandal.
Whether this outcome, and the continued existence of the Too Big to Fail Banks, is good for the national interest is an entirely different question, one not addressed by the non-binding resolution.
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Today’s Econ Haiku:
‘Make no little plans’
Biodomes for Amazon
Alas, dull towers