Would Jamie Dimon Really Leave JPMorgan Over This Proxy Feud?

JPMorgan Chase's (NYSE: JPM  ) CEO Jamie Dimon has been mostly quiet on the subject of the upcoming proxy vote at next week's annual meeting, where shareholders will decide whether the big bank's chief will retain his dual roles of board of directors chair and CEO. As the debate heats up, however, Dimon commented at a recent investors' meeting that one possible outcome of a vote to split the positions could be that he "might leave."

A personal affront
It's not difficult to understand why he would feel that way. Such an outcome would surely be a vote against him personally, and would plant the blame for the London Whale boondoggle firmly on his shoulders.

That fiasco has lent new immediacy to the issue, since concerns still linger regarding the bank's risk profile. The same question at last year's meeting garnered 40% affirmative votes -- and, though nonbinding, experts agree that an approval of more than half of stockholders this time around would make it unseemly for the board to ignore the mandate.

Does it matter?
Sharing these roles is not uncommon in many sectors, though, among big banks, the practice isn't necessarily dominant. Similar to JPMorgan, Wells Fargo's (NYSE: WFC  ) John Stumpf holds both roles, though Citigroup's (NYSE: C  ) CEO Michael Corbat doesn't chair Citigroup's board; in fact, it was a strong chair, in the person of Michael O'Neill, that was able to push through the ouster of Vikram Pandit last year.

And, though Wells certainly has not been associated with the type of risk issues that made themselves apparent at JPMorgan, this question hangs in the air: Would splitting the roles make a difference?

The bank's board doesn't think it would be a good idea, but three of those persons are finding their own positions in jeopardy, as well. Then again, the board, which supports Dimon, also exhorts shareholders to look at the bank as a whole, and not just its more unpleasant parts -- like the trading error -- in isolation. In addition, at least one study, which took a look at the savings and loan industry, found that thrifts with a leadership paradigm like JPMorgan's fared better during that crisis than those that split the two roles.

On the other side of the question are investor advisory firms such as Institutional Shareholder Services, and Glass, Lewis & Co., which encourage shareholders to vote in favor of the proposal. Australian superfund First Super has also come out against Dimon and plans to contact partners such as BlackRock (NYSE: BLK  ) to find out how they plan to vote.

Blackrock and two other equity funds, Vanguard and Fidelity, voted in support of Dimon last year, but they haven't yet made their current positions clear. Blackrock, for its part, will rely on outside contractor Governance for Owners to take care of the proxy vote issue on its behalf.

Now that Dimon has made his thoughts on the matter more clear, investors might consider the question of whether the colorful CEO is an integral part of the megabank's overall success. If so, voting in favor of the proposal may very well cause Dimon's departure, which might cause more problems at the bank than keeping the status quo intact. With only a little more than a week before the shareholders' meeting, investors have a lot of thinking to do.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, check out The Motley Fool's premium research report on the company. Click here now for instant access!


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  • Report this Comment On May 13, 2013, at 10:09 AM, BDF958 wrote:

    Not a chance. But he will bluff his way to getting what he wants, and the board, fearfull of possible impact on stock, will cave in. That's how its done; quite predictable.

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