So, Jamie Dimon gets to keep his dual roles as CEO and board chairman of JP Morgan, according to the results of a shareholder vote on a proposal to split those positions. But it wasn’t a total loss for the bank’s investors. And, breaking with JP Morgan’s shareholder gathering tradition, the critiques of shareholders were definitely heard at this year’s annual meeting.
Last year’s meeting was fairly dull, even though trading losses from risky derivative bets—aka the London Whale scandal—had already been unveiled. (Granted, the full extent of the loss, which would grow to $6.2 billion, wasn’t yet fully known.) The tone changed after a harsh US Senate hearing and report in March of this year criticized JP Morgan executives for the trading loss. That’s when the heat finally hit Dimon and JP Morgan, and so began the rally to strip Dimon of his chairman title.
At this year’s meeting, shareholders laid in. They criticized the board’s lack of oversight in the London Whale incident. Investors also laid out their case for separating the chairman and CEO roles. Some argued that due to the bank’s complexity, Dimon should focus solely on running JP Morgan.
The shareholder proposal on splitting the CEO/chairman roles earned fewer votes than a similar proposal last year (with a 32% approval rate versus 40% in 2012), but the reform campaign isn’t over. The lead independent director on the board, former ExxonMobil CEO Lee Raymond, indicated that directors were considering changes to the board’s structure, including the important risk committee.
Still, Raymond defended the board. Even the JP Morgan employees making the trades in the London Whale scandal didn’t understand it, he argued, so the risk committee shouldn’t be blamed for not catching it. He also praised Dimon and said JP Morgan was the best performing bank among the large financial firms.
Dimon’s case was helped by the fact that, despite the trading loss, JP Morgan’s performance wasn’t affected and the bank had record profits in the first quarter. But the bank is the target of at least eight government investigations. So to appease shareholders, any board changes will need some real teeth.