JPMorgan board unanimously backs Dimon as chairman, CEO: letter

Fri May 10, 2013 4:27pm EDT
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By David Henry

NEW YORK (Reuters) - Two ranking JPMorgan Chase & Co JPM.N directors issued a letter to shareholders on Friday arguing against recommendations by proxy advisory firms to split the duties of Chairman and CEO Jamie Dimon and vote against some directors.

The board is unanimous in its view that it is best for Dimon to hold both roles and the current governance structure "is working effectively," according to the letter signed by presiding director Lee Raymond and William Weldon, who is chairman of the corporate governance and nominating committee.

The letter warned that a vote against current directors or to split the CEO and chairman roles "could be disruptive to the company and is not in shareholders' best interests."

The letter is a direct response to reports in the past seven days from advisory firms Institutional Investors Services and Glass Lewis & Co. The firms concluded that investigations of the bank's $6.2 billion loss on the "London Whale" derivatives trades showed the board had failed in its oversight of JPMorgan executives.

The incident is cited in policy debates in Washington as evidence big banks need to be broken up or required to hold much more capital for the safety of the financial system.

Both advisory firms recommended JPMorgan shareholders vote against re-election of three board members who served on the board's risk policy committee when the losses occurred.

The advisory firms generally take the view that having a board chairman who is separate from the CEO in a company leads to better oversight. They said the London Whale episode showed that JPMorgan was no exception.

The board letter on Friday said the firms "and others have incorrectly and unfairly characterized management's mistakes as a failure by the risk policy committee."   Continued...

JPMorgan Chase & Co CEO Jamie Dimon speaks about the state of the global economy at a forum hosted by the Council on Foreign Relations (CFR) in Washington October 10, 2012. REUTERS/Yuri Gripas