Published May 21, 2013
JPMorgan's (JPM) Jamie Dimon has prevailed over a shareholder revolt that sought to strip him of one of his titles. Dimon will retain both his chief executive and chairman roles at the banking giant.
A preliminary count of ballots announced at JPMorgan’s annual shareholder meeting in Tampa, Fla.. on Tuesday revealed that just 32.2% of shareholders vote to split the roles of CEO and chairman.
JPMorgan’s shares jumped higher after news of Dimon’s victory spread. The stock was up $1.07, or 2.05%, at $53.36 in midday trading on the New York Stock Exchange.
.Dimon has said he would consider leaving JPMorgan if the shareholder vote turned against him.
The outspoken Dimon was long-considered a prince of Wall Street – if not a king – for having steered JPMorgan through the recent financial crisis with minimal negative impact. Dimon insisted that JPMorgan never needed a bailout during the darkest days of the crisis, but only took the government funds because officials demanded that he do it.
But all that changed just over a year ago when JPMorgan announced it had lost $6.2 billion on derivative bets made out of the firm’s London office. The massive losses were blamed on a trader who’s come to be known as the ‘London whale.’
Heads rolled at the firm as the debacle played out in the media and before Congressional hearings in Washington, D.C. But Dimon, 57, survived the crisis.
The fallout has primarily come among groups of institutional shareholders who want more oversight of Dimon, not necessarily to replace him. These shareholders have argued that having one person serve as CEO and chairman is a conflict of interest because the board of directors overseen by the chairman is supposed to maintain an objective view of the company’s operations. That’s not possible if the CEO and chairman are the same person, the dissenting shareholders believe.
Former U.S. Senator Judd Gregg (R- N.H.), in an interview with the FOX Business Network, praised Dimon as a “strong leader” and said he disagreed that Dimon’s dual roles posed a conflict of interest. Gregg was recently named CEO of the Securities Industry and Financial Markets Association, one of Wall Street’s top lobbying groups.
Gregg said JPMorgan has prospered under Dimon and that the bank and its shareholders likely benefit from having a single leader.
One analyst has estimated that JPMorgan’s stock could lose 10% if Dimon leaves, shaving $20 billion off the firm’s market value.
Analyst Mike Mayo with brokerage firm CLSA said in a recent note to clients that the bank has no one lined up to replace Dimon if Dimon were to leave in the near future.
The shareholder proposal was non-binding, which means the bank's board of directors did not have to accept the recommendation even had the measure received majority shareholder support. Neverthless, it would have represented a clear rebuke of Dimon’s leadership.
JPMorgan’s board steadfastly supported Dimon and Dimon’s supporters lobbied hard for the CEO to retain his dual role.