Investors may lobby JPMorgan to clip Dimon's wings if vote fails

Sun May 5, 2013 4:19pm EDT
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By Nadia Damouni and David Henry

(Reuters) - JPMorgan Chase & Co's (JPM.N: Quote) Jamie Dimon may be losing ground in his fight to keep the title of chairman, as some major investors push for more oversight of the chief executive after the "London whale" trading losses.

At the largest U.S. bank's annual meeting in two weeks, shareholders will be able to vote on a non-binding proposal to separate the chairman and CEO roles. Two of the bank's top 10 shareholders told Reuters they are considering voting in favor of the proposal, a reversal of their position last year, because of the disastrous bets on credit derivatives that cost the bank more than $6 billion last year.

The proposal is only a non-binding recommendation and it is not clear what the board will do if it passes. ISS Proxy Advisory Services, the leading proxy advisory firm, on Friday recommended investors support the proposal and also said they should vote against the re-election of three directors who they said had failed in their oversight of the bank.

JPMorgan declined to comment for this story. The bank's board has said it opposes the shareholder proposal and that the company's handling of the trading loss shows its current governance works.

The bank's directors are leading an aggressive campaign to persuade shareholders to vote against it, one of the investors said. It is not clear how much investor support there is for the proposal.

The two JPMorgan investors, who were not authorized to speak on the record, said that however the vote shakes out, they plan to continue to push the bank's directors behind the scenes to take at least some power from Dimon.

One investor said they will likely encourage the bank to give more authority to its lead independent director, former ExxonMobil Chief Executive Lee Raymond. At JPMorgan, the lead director is currently known as the "presiding director," a role that includes approving board agendas and schedules and leading meetings of independent directors.

The second investor said they would not be satisfied with anything less than a separation of the two roles because being a chairman is a full-time job.   Continued...

JPMorgan Chase & Co CEO Jamie Dimon testifies before the House Financial Services hearing on "Examining Bank Supervision and Risk Management in Light of JPMorgan Chase's Trading Loss" on Capitol Hill in Washington June 19, 2012. REUTERS/Yuri Gripas