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Aluminum foils

19 May 2015 By Antony Currie

Order a few less balloons for Jamie Dimon’s tenth anniversary. The JPMorgan boss celebrates a decade at the helm later this year, but on Tuesday stockholders rained on the parade. More than a third of the shares voted against his pay and in favor of splitting the roles of chairman and chief executive. It suggests Dimon will face vocal opposition from a large minority of investors for perhaps as long as he is in the job.

After all, the $2.6 trillion bank just came through a mostly peaceful year. Its biggest legal costs seem behind it and there were no big trading scandals. Revenue dipped slightly, but all things considered it was no surprise Dimon’s pay held steady at $20 million. If anything, it was his compensation a year earlier that deserved opprobrium, jumping 74 percent even as the bank shelled out billions of dollars to settle claims of wrongdoing.

This time around, however, Dimon was awarded $7.4 million, or 40 percent of his bonus, in cash. It’s the first time since 2011 he has been paid anything but stock. Shareholder advisory firm Glass Lewis called on investors to reject it because the bank has provided no performance metrics, like return on equity, for executive pay. As these become more common, JPMorgan increasingly becomes an outlier. It helps explain why 39 percent of shares voted against, the lowest figure since the Dodd-Frank Act in 2010 required a say-on-pay vote.

Arguably, the more important ballot measure was on splitting the two top roles, albeit only after Dimon leaves. Some 36 percent of shares voted in favor, close to the 40 percent support a similar proposition garnered three years ago, just days after Dimon revealed the bank’s whopping London Whale trading losses.

Perhaps Dimon’s cancer diagnosis in 2014 heightened concerns about the possibility of losing a chairman and CEO at once. Better yet would be if big bank shareholders were starting to appreciate the broader corporate governance benefits of having two people in the jobs.

Either way, the votes at JPMorgan are a welcome sign. It means Dimon and his fellow board members are being watched closely. Long may the vigilance last.


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