JPMorgan shareholders urged to reject three directors
NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) shareholders should vote against the re-election of three board members because they failed to properly oversee risk-taking that led to $6.2 billion of losses on the so-called "London Whale" trades, an influential proxy advisory firm said.
ISS Proxy Advisory Services said in a report released late Friday that directors David Cote, James Crown and Ellen Flutter should not be re-elected at the company's annual meeting this month because of "material failures of stewardship and risk oversight."
The report by ISS ratchets up pressure on directors to reduce Dimon's power at JPMorgan, the biggest bank based in the United States, as some stockholders push for more supervision of the outspoken executive.
A statement from JPMorgan spokeswoman Kristin Lemkau on Saturday said: "The company strongly endorses the re-election of its current directors and disagrees with ISS's position."
ISS also renewed its recommendation from a year ago that CEO and Chairman of the Board Jamie Dimon give up one of those two titles. ISS said investigations of the derivatives loss, which surfaced right before last year's shareholder meeting, showed that JPMorgan executives need more independent oversight and that the company is too big and too complex for one person to be able to do both jobs.
Shareholders will meet on May 21 in Tampa, Florida. They will vote on the re-election of the company's 11 directors and on a non-binding proposal from four institutional shareholders calling on the board to have a chairman who is independent from management. A similar advisory proposal failed to pass last year, receiving only 40 percent of the vote. That vote was five percentage points more than similar proposals at other companies that year.
The independent chair vote is developing into a major test for Dimon, 57. It comes as criticism, and sanctions from regulators, over poor risk management have piled up since the "London Whale" losses surfaced at the bank, which has $2.39 trillion in assets, the most of any U.S. bank.
The trading debacle has picked up the same "London Whale" nickname that hedge funds gave to a JPMorgan trader for the outsized derivatives bets he placed for the company.
The ISS recommendations on the re-election of directors shows the shareholder debate over governance of the company is broadening beyond Dimon. Continued...