Glass, Lewis calls for Dimon to split roles

JPMorgan Chase & Co Chairman and CEO Jamie Dimon testifies before the House Financial Services Committee.

Story highlights

  • Last year a proposal to split the chairman and chief executive roles attracted 40 per cent of the vote
  • JPMorgan executives are continuing efforts to persuade shareholders to stick with the current structure
  • Calls between senior executives and institutional investors are scheduled for the next two weeks

Jamie Dimon's prospects of holding on to his chairmanship of JPMorgan Chase darkened on Tuesday as a second shareholder advisory group recommended he be stripped of the role.

About 20 per cent of the vote has been received, according to a person familiar with the matter, and JPMorgan executives are continuing efforts to persuade shareholders to stick with the current structure and board.

Calls between senior executives and institutional investors are scheduled for the next two weeks, up to the crucial annual meeting in Tampa on May 21 when shareholders will vote on whether to split Mr Dimon's chief executive and chairman roles.

Damaged by the fallout from the "London whale" affair, in which JPMorgan traders lost $6bn betting on credit derivatives, Mr Dimon could be forced to drop one of his positions.

Glass, Lewis on Tuesday followed its rival ISS in advising shareholders to vote for a split in the roles and against the re-election of a number of directors.

The bank's senior independent director, Lee Raymond, the ExxonMobil chief executive until he retired in 2005, and a JPMorgan board member since 1987, has led talks with shareholders.

Last year a proposal to split the chairman and chief executive roles attracted 40 per cent of the vote but many shareholders voted before JPMorgan revealed its trading losses. Since the incident regulators and members of Congress have attacked the bank's management for failures of oversight and systemic breaches of rules.

    "The investigations have revealed questionable risk management practices at both the senior management and board levels," said Glass, Lewis.

    The advisory group added to pressure not only on Mr Dimon but other directors, recommending shareholders vote against the re-election of James Bell, Crandall Bowles, David Cote, James Crown, Ellen Futter and Laban Jackson, citing a variety of deficiencies.

    "With the two leading proxy advisory firms recommending investors vote against key directors, it is clear that the status quo can no longer continue," said Dieter Waizenegger, executive director of the CtW Investment Group, which advises union pension funds and has advocated for a split.

    "Rather than defending its mistakes all the way up to the annual meeting, the board should start rebuilding shareholder trust now by engaging with investors to select new, experienced directors to oversee risk management."

    "JPMorgan Chase is akin to an A student that is now getting B grades," said Mike Mayo, analyst at CLSA, in a note. "The fallout from last year's London Whale loss seems to increase risk with management, reporting, consistency and brand."