Two JPMorgan Chase & Co directors who sat on the board's risk committee in the run-up to the London Whale trading debacle have retired, the bank said on Friday, and a source said the company expects to name replacements who are risk or finance experts soon.
Investors have been pressuring the bank to add directors with financial skills after the trading losses that came to light last year. Lee Raymond, the lead independent director at the bank, said at its annual meeting in May that the board was listening to shareholders and would make changes.
With the bank lining up two new directors, long-time board members David Cote and Ellen Futter felt comfortable stepping down, the person familiar with the matter said.
Shareholder advisory groups had recommended investors not re-elect Cote, chairman and chief executive of Honeywell International Inc , and Futter, head of the American Museum of Natural History, at the annual meeting.
Although the two won enough votes to be re-elected - Futter received 53.1 percent of the vote and Cote received 59.3 percent - most of their peers received at least 90 percent approval. Shareholders have told Reuters that they have continued to agitate for changes on the board since the meeting.
In a statement, Futter said that having worked as a JPMorgan director since the mid-1990s, she thought it was time to step down. Cote cited the increasing demands on directors of companies in the financial services sector and his limited personal time.
The board expects to name new directors "as the year goes on," Raymond, the presiding director, said in the statement on Friday.
Two major advisory firms had also recommended investors vote against director James Crown, who was also on the risk committee when JPMorgan announced the London Whale derivatives trades that ultimately cost the bank more than $6.2 billion and damaged its reputation.
Crown, who is president of a large private investment firm and received 57 percent of the vote, will stay on the board, the person said. The other member of the four-person risk panel is Timothy Flynn, a retired chairman of accounting firm KPMG International who joined the board after the derivatives trades had been made.
Dieter Waizenegger, executive director of the CtW Investment Group, which had campaigned against the directors, issued a statement calling the resignations "a good first step" and adding that he hopes the board "will now completely overhaul how it manages risk."
AFTER LOSSES, CHANGE
JPMorgan lost more than $6.2 billion last year from bad bets on credit derivatives, an episode that shook both the bank's management and its investors. Many shareholders argued that Chairman and Chief Executive Jamie Dimon was not receiving enough oversight from his board and needed more checks on his power, particularly from the risk committee.
A group of shareholders tried to strip Dimon of his chairmanship in the bank's proxy vote, but Dimon won 68 percent approval to continue to head the board of directors. That percentage exceeded last year's 60 percent approval.
Many investors feared Dimon would quit if stripped of the title, (ID:nL2N0E20MO) but he has since said he would not.
In Friday's statement from the bank, Dimon said of Cote and Futter, "We have learned a great deal from both of them and will miss having them as members of our board."
(Reporting by David Henry and Nadia Damouni in New York; Editing by Dan Wilchins, Gerald E. McCormick, Tim Dobbyn and Dan Grebler)