The fate of Jamie Dimon of JPMorgan Chase could hinge on a small, London-based firm that is virtually unknown, even on Wall Street.
The firm, Governance for Owners, has been tasked with voting the shares of the bank's largest shareholder — the asset management behemoth BlackRock — on the question of whether to split the jobs of chairman and chief executive. Mr. Dimon been chairman since 2006 and chief executive since 2005.
The shareholder vote on May 21 has emerged as a referendum on the leadership of Mr. Dimon after a multibillion-dollar trading loss last year and dust-ups with regulators. While not binding, a majority vote to have a separate chairman and chief executive would be a heavy blow to the influential banker.
It is not known how Governance for Owners will vote BlackRock's approximately 6.5 percent stake, but a few influential shareholders could tip the outcome. Last year, some 40 percent of JPMorgan's shares supported dividing the top jobs, although BlackRock did not.
"JPMorgan Chase strongly endorses the re-election of its current directors. This is the same board, risk committee and audit committee that helped guide the company through the financial crisis without a single losing quarter and has led the company through three years of record performance," said Kristin Lemkau, a JPMorgan spokeswoman.
In deciding how to vote, some JPMorgan shareholders are weighing whether the board's lead director, Lee Raymond, the no-nonsense former chief executive of Exxon Mobil, is a strong enough counterbalance to Mr. Dimon. Some question whether Mr. Raymond has pushed back enough on decisions made by Mr. Dimon, saying he and the board appear to have been largely reactive. His defenders point out that he is a strong personality and was instrumental in the decision earlier this year to slash Mr. Dimon's compensation by more than 50 percent, to $11.5 million.
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Having a strong lead director has been important to BlackRock. The firm has previously said that it supports companies that do not have an independent chairman if the lead director is a strong figure and has, for example, the power to set board meetings and call meetings where management is not present. In JPMorgan's case Mr. Raymond does both these things.
In voting, Governance for Owners does not have to follow BlackRock's corporate governance philosophy, but will take it into account, according to people briefed on the matter. Governance for Owners, which advises shareholders on how to vote and also runs a small shareholder activism fund, did not respond to requests for comment.
Another call for a split came on Tuesday from Glass, Lewis, a shareholder advisory firm, which also urged investors to withhold support for six of the bank's 11 directors. Its larger rival, Institutional Shareholder Services, on Friday supported a split and recommended against voting for three directors. Both reports also raised questions about the independence and qualifications of several board members.
BlackRock outsourced its voting because of a provision in the Bank Holding Company Act. Because of its ties to the PNC Financial Services Group, BlackRock is required to outsource its votes to independent third parties when ownership exceeds a certain threshold. This provision is aimed at stopping any one company from having inordinate influence over the banking industry. BlackRock appears to be the only major JPMorgan shareholder to be affected this way.
Behind the scenes, JPMorgan has been aggressively working to persuade shareholders to support having Mr. Dimon hold both the chairman and chief executive titles. Most shareholders will not vote until the week before the May 21 meeting and in the leadup, board members are sitting down with some of JPMorgan's biggest shareholders to make their case.
"There's a fundamental conflict in combining the roles of chairman and C.E.O.," Anne Simpson, the director of corporate governance at Calpers, the big California public pension fund that is the bank's 50th-biggest shareholder. "It's all thrown into stark relief when you're dealing with a company that's too big to fail." The pension fund plans to vote for a split.
Some directors and top bank executives say privately that it should be up to the board, not shareholders, to make the decision to sever the two roles.
They also contend that shareholders need to put the trading loss by the bank's chief investment office in London in context. While the loss was damaging, they note it was an isolated incident and in some ways things have never been better at the bank. Last month, the bank reported its 12th consecutive quarterly profit, aided by strong revenue gains from investment banking and mortgage-related activity.
Still there is some concern that investors are unhappy with the fallout from the trading losses and persistent regulatory issues, wondering whether a board shake-up is needed to rein in Mr. Dimon.
The report by I.S.S. cites "material failures of stewardship and risk oversight" by the bank's board after a multibillion-dollar trading loss last year. (Both I.S.S. and Glass, Lewis do not actually vote shares, but many investors follow their recommendations, or use them as a basis on how to vote.)
I.S.S.'s pointed criticism of JPMorgan directors and its recommendation that shareholders withhold support for three who serve on the board's risk policy committee — David M. Cote, James S. Crown and Ellen V. Futter — was a rare move for the organization, which noted that its recommendation was usually only under "extraordinary circumstances."
In its report, Glass, Lewis echoed the criticism of directors on the risk policy committee and recommended votes against three additional directors: Crandall C. Bowles, James A. Bell and Laban P. Jackson, who are members of the board's audit committee.
"We believe that shareholders may justifiably expect that the audit committee of one of the nation's largest banks, and one of the largest participants in the global capital and derivative markets, should act to ensure that the bank's traders cannot obfuscate the values of their positions with as much ease as evidently occurred in the London Whale matter," Glass, Lewis wrote.
Both the Glass, Lewis and I.S.S. reports raise questions about the independence of several board members.
The directors, the reports note, have business relationships with JPMorgan. Crandall C. Bowles, for example, as chairman of the board of Springs Industries, has a financial relationship with JPMorgan. The bank, according to I.S.S., is currently "acting as financial adviser" to Springs Industries and could participate "in financing" for a possible acquisition.
The financial relationships are transparent and fully disclosed to regulators and investors, a person close to the bank noted.
Michael J. de la Merced contributed reporting.