On the back of yesterday's stinging losses, stocks opened higher this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average (^DJI +1.24%) up 0.56% each at 10:10 a.m. EDT. With regard to this week's flash crisis -- the Cypriot question -- it appears investors are now betting that the Cypriot government and lawmakers will see reason and make the hard decisions necessary to obtain bailout financing from international lenders. Their options are narrowing, and time is running out.
Splitting roles isn't splitting hairs
Dow component JPMorgan Chase (JPM +1.81%) is slated to release its proxy materials today for the bank's annual shareholder meeting, and they are expected to show that the board remains in favor of maintaining Jamie Dimon in his dual role of CEO and chairman.
Last year, a measure to strip Dimon of the latter role received 40% approval from shareholders -- that was just after a rare aquatic mammal known as the "London Whale" was discovered to be inhabiting JPMorgan's London office. After the Senate subcommittee for investigations last week released a 300-page report detailing the management breakdowns that facilitated that fiasco, it would not be surprising if the same measure were to receive similar support this year.
Last year the board justified its opposition to splitting the roles on the grounds that this would create "uncertainty, confusion and inefficiency in board and management function and relations." I don't see it. They'd need to provide some evidence for that statement, for a start.
Still, they wisely adopted a nondogmatic line on the issue, stating: "The firm’s board of directors has no established policy on whether or not to have a non-executive chairman and believes that it should make that judgment based on circumstances and experience. The board has determined that the most effective leadership model for the firm currently is that Mr Dimon serves as both chairman and chief executive officer."
According to the Financial Times, the language in this year's proxy is expected will be similar.
On the issue of splitting the CEO and chairman roles, the natural bias ought to be in favor of having two separate people fill them. Why? Because there are obvious conflicts of interest between the role of chairman, which is to protect shareholders' interests, and that of CEO, which is to manage the company. Add to that some signs that Jamie Dimon, who is an excellent manager, could use an ego check, and my inclination would be to support splitting the roles at JPMorgan.
