JP Morgan CEO Jamie Dimon’s $20 million pay package will stay intact, despite the fact that nearly 40% of the mega bank’s shareholders voted Tuesday (May 19) not to approve the mighty bank chief’s compensation.
Just 61% of shareholders voted in favor of the pay package, enough to approve it, but down from 78% last year. Also, more than a third of shareholders voted in favor of having an independent board chairman (rather than letting Dimon hold the board chair title along with CEO).
The surge in disapproval followed strong recommendations against approving the pay from two prominent advisory firms, ISS and Glass Lewis, which advise big institutional investors on corporate governance issues. The issue was not so much the amount Dimon gets paid (unchanged at $20 million from last year), or the amount of turmoil the bank has gone through over the past year. Rather, the advisory firms object to the inconsistent measures that the bank’s board of directors use to decide how much cash and stock to pay its top executives.
Voting down pay is a pretty rare for for corporate shareholders. More than 90% of companies get the okay from at least 70% of shareholders, according to the consultancy Semler Brossy. And CEO pay is on the rise.
The major pushback from institutional investors and other shareholders prompted the bank’s board of directors to at least give a vague nod to shareholders, indicating that they will consider making some changes, according to Bloomberg:
“They generally did not question the actual level of compensation, but the structure of a component of compensation,” [Lee Raymond, lead director and chairman of the compensation committee] said at the meeting. “We acknowledge the importance of the question,” he said, adding that he would update investors on changes.
We’ll be waiting for the update.