JPMorgan Chase Live Blog: It's a Landslide!
9:13 am: The proposal to divide the roles has been defeated, narrowly, according to CNBC's Kayla Tausche who is on the scene in Tampa.
9:00 a.m.: All attention will be on JPMorgan Chase's Chairman and CEO Jamie Dimon as he takes the stage Tuesday morning during the bank's annual shareholder meeting in Tampa, Florida.
Dimon's dual role as chairman and chief executive have been challenged by a shareholder proposal urging the board to divide the positions. The proposal has the backing of several large pension funds as well as the big shareholder advisory groups I.S.S. and Glass Lewis.
Although Dimon is viewed as having successfully navigated JPMorgan through the worst of the financial crisis, in the past year or so he has come under fire on a number of fronts. His vocal criticism of new bank regulation has helped him become a symbol of Wall Street's resistance to reform. Losses stemming from the bank's London Whale fiasco have sparked shareholder ire and concerns that Dimon's reputation for risk-management might not be all it was cracked up to be. (For an extensive background on this, see this post on the shareholder vote.)
The shareholder vote is only advisory, a vote to separate the CEO job from the chairmanship will be viewed as both a personal rebuke for Dimon and a shift in the balance of power in corporate America. Many large financial institutions have CEOs who are also chairman, as do the majority of companies in the S&P 500. Typically proposals from outside shareholders only overcome management resistance when a company is in legal or regulatory trouble or its share price is depressed.
Last year a similar proposal garnered the votes of 40 percent of the shares, which is considered unusually high. If that number moves up significantly, it would be an embarrassment to Dimon and the board—even if it fails to garner a majority. If it moves down or simply stays level, it will be viewed as an endorsement of Dimon's leadership.
The bank has been under extensive regulatory pressure. In addition to the London Whale fiasco, the bank has faced scrutiny over its handling of Bernie Madoff accounts, accusations of shenanigans regarding Midwest and California electricity markets, and has been accused by the Office of the Comptroller of the Currency of having inadequate protections against money laundering.
In addition to its support for dividing the CEO and chairman jobs, I.S.S. has called upon shareholders to withhold support for three directors who serve on the risk policy committee.
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