Will JPMorgan Shareholders Demote Jamie Dimon?
JPMorgan Chase (NYSE:JPM) is scrambling to keep chairman and CEO Jamie Dimon in both positions as disgruntled shareholders try to deliver a vote that would effectively demote him. JPMorgan’s board delivered a hearty endorsement of Dimon’s performance in late March following a rough period for the chief executive resulting from the “London Whale” investment debacle.
Though he had enjoyed widespread popularity and admiration before the events of May 2012, Dimon’s reputation was hurt badly by the failed London office investment and the resulting fallout. Matters have gotten worse as Senate committee hearings have brought into public view embarrassing details about the trade. Criminal charges are pending, though sources indicate Dimon will not be one of the figures cited as criminally responsible.
However, Dimon’s perception as unflappable and expert in all aspects of the job has disappeared. The shareholder proposal to separate the jobs of chief executive and board chairman would allow for more accountability in the upper reaches of JPMorgan’s operation, but it would also represent a demotion for Dimon. Faced with an uncertain line of succession, many shareholders are pledging to vote against the separation of jobs. Many expect Dimon to resign if the proposal passes.
Most of the largest banks keep one person in both roles, though Bank of America (NYSE:BAC) Citigroup (NYSE:C) have separated the positions in recent years to indicate a new direction for the company. The proposal to split the roles at JPMorgan cites the $6.2 billion in “London Whale” losses as well as the ensuing court proceedings that have cast the company in an unfavorable light. Nonetheless, the board’s backing of Dimon indicates it is happy with the chief executive’s response to the disaster, not to mention his expert work at the helm of JPMorgan in 2009 and beyond.
The board’s approval of Dimon mentioned the company’s strong financial performance before and after the losses, hinting at Dimon’s ability to right the ship no matter the scandal at hand. Since the main shareholders in the company typically vote with JPMorgan management, it is unlikely the group lobbying for Dimon’s demotion can collect the necessary votes for the meeting in May. However, developments in the Senate hearings could change the tenor of the discussion in the days to come.