After setting another record high yesterday, U.S. stocks opened lower this morning, with the S&P 500 (SNPINDEX:^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) down 0.05% and 0.07%, respectively, at 10:10 a.m. EDT.
Is two better than one?
Will JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon keep his other title -- that of chairman of the largest U.S. bank by assets? Yesterday, proxy firm Glass Lewis joined its competitor ISS in recommending shareholders vote in favor of splitting the roles of CEO and chairman. Last year, a similar proposition received 40% of the shareholder vote, but this was before the full extent of the London Whale trading debacle had come to light.
With less than two weeks to go until the company's May 21 annual meeting in Florida, the contest is heating up. In March, JPMorgan's board urged shareholders to vote against a proposition to split the roles.
The board isn't completely isolated. Last Friday, for example, Mr. Dimon received a heavyweight endorsement from Berkshire Hathaway CEO Warren Buffett, who told Bloomberg: "I'm 100% for Jamie. I couldn't think of a better chairman." At least one commentator observed that this is the natural position for Buffett to adopt -- after all, he himself holds both roles at Berkshire. While the Oracle of Omaha certainly isn't immune to biased thinking, I don't think that's enough to justify his position. Buffett owns shares of JPMorgan in his personal account.
Another highly respected, value-oriented money manager also thinks splitting the roles would be a mistake. Christopher Davis of Davis Advisors, which owns 7 million shares of JPMorgan, told the Financial Times that shareholders should back Dimon's track record of "exceptional" performance, adding, "To have a vote of no confidence by the shareholders of that company is an insulting and morale-sapping type of outcome."
In the past, I've called for Mr. Dimon to lose his chairman's title, but I now think the case is less clear-cut than I initially believed. Bringing in a new chairman at a time when the bank faces intense regulatory scrutiny could be disruptive. Without question, Jamie Dimon's successor shouldn't combine both roles; in the meantime, however, whether he is cloaked in two roles or just one, Dimon has his work cut out for him. He needs to address aggressively the risk management and supervisory weaknesses regulators have identified and repair the bank's relationship with these same regulators. That's a constituency no banker can afford to ignore, particularly in the Dodd-Frank world.