Dimon, After Winning Support, Moves to Mend Bank’s Fences

A resounding shareholder endorsement of Jamie Dimon has done what JPMorgan Chase’s robust profits and soaring stock price could not: it helps the nation’s largest bank and its chief executive move beyond a multibillion-dollar trading loss that has dogged the bank for more than a year.

At JPMorgan’s annual meeting in Florida on Tuesday, some 70 percent of the shares voted to keep Mr. Dimon as both chairman and chief executive. It was the culmination of one of the most closely watched corporate contests in recent memory â€" one that pitted a small but vocal group of shareholders against the most powerful banker in America.

His victory secure, Mr. Dimon is now redoubling his efforts toward repairing JPMorgan’s frayed relationships with regulators, fortifying risk controls and bolstering the bank’s businesses, people briefed on the matter say.

While the shareholder resolution to split the jobs of chief executive and chairman was pitched as improving corporate governance, it soon became tangled up in how Mr. Dimon handled last year’s trading blowup. The surprising loss at the chief investment office unit in London felled some of Mr. Dimon’s top lieutenants and helped lay bare broad risk and control weaknesses throughout the vast bank.

Before the vote, Mr. Dimon complained to executives within the bank that the seemingly unrelenting fascination with the shareholder proposal was an unfortunate distraction that siphoned energy and resources, according to several people close to the bank.

Hastily leaving the annual meeting in Tampa, Mr. Dimon expressed that exasperation to reporters, saying, “We really don’t want any more press.”

Afterward on Tuesday, in an e-mail to employees, the chief executive wrote: “There has been a lot of talk around this topic over the past few weeks, and in some cases, it was distracting. In spite of that, you stood tall and maintained your focus on the business and did the job we are all here to do.”

With the decisive shareholder endorsement, Mr. Dimon has bolstered his influence at the helm of JPMorgan, while the proxy advisory firms that advise investors on corporate governance issues saw their influence wilt. The tally demonstrated that more investors, especially mutual funds, are doing their own work on proxy questions instead of simply relying on the recommendations of firms like Institutional Shareholder Services or I.S.S.

“Mutual funds are paying close attention to these contested elections, especially because there are fewer publicly traded companies now that make up a greater share of the funds’ portfolios,” said Gerald Davis, a professor of management and organizations at the University of Michigan. “It pays to really pay attention.”

Matrix Asset Advisors Inc, which holds roughly 619,000 JPMorgan shares, was one such institutional investor that broke ranks with I.S.S. In principle, Matrix supports a separate chairman and chief executive, said Jordan Posner, its managing director, but in the case of JPMorgan, those rules shifted and it voted against the shareholder proposal.

“We think that pragmatically, it made more sense for Jamie Dimon to continue in both roles,” Mr. Posner said. “He has done an outstanding job.”

The outcome of the vote, coming on the heels of aggressive lobbying by JPMorgan to secure a victory, also pointed, some observers say, to how Wall Street tackles shareholder discontent as if it were a political campaign.

Through meetings and calls to investors, JPMorgan successfully won the support of a handful of investors who backed Mr. Dimon in this year’s closely watched contest, but voted to divide the roles last year, according to two people with knowledge of the matter.

Now Mr. Dimon plans to marshal the momentum from the shareholder victory to try to strengthen the bank’s compliance and audit controls, according to several people with knowledge of the matter. That cleanup work was already under way, but the victory gives him more of a mandate to tackle it head on, these people say.

As part of that push, JPMorgan is beefing up the staff under Matt Zames, JPMorgan’s chief operating officer, according to several people close to the bank. Mr. Zames was initially chosen by Mr. Dimon to take over the chief investment office in the aftermath of the troubled bets. By the end of the year, JPMorgan is on track to hire as many as 1,000 employees charged with compliance and controls.

Top bank executives are increasing the frequency of their trips to meet with regulators in Washington, the people close to the bank said. Gordon A. Smith, who is chief executive of JPMorgan’s community and consumer banking, has taken about one trip to Washington each month.

Mending the frayed relationships with Washington will be difficult, however, as the bank continues to contend with a series of regulatory missteps.

In January, the Office of the Comptroller of the Currency took an enforcement action against JPMorgan, faulting it for lapses in how the bank controls against the flow of tainted money. The Comptroller is also investigating whether JPMorgan failed to tell federal authorities of its suspicions about Bernard L. Madoff, subsequently convicted in the largest Ponzi scheme in history. The agency is now weighing a move aginst JPMorgan for using questionable documents to collect overdue credit card bills, according to officials with knowledge of the investigations.

“The regulators are not going away and JPMorgan still has a target on its back,” said Michael Mayo, a banking analyst for CLSA.

And despite the blessing of the bank’s shareholders, some regulators remain skeptical that Mr. Dimon and JPMorgan can truly overhaul a bank and a culture where requests from regulators were sometimes met with outright resistance.

Still, the people close to the bank say that Mr. Dimon is working to improve the bank’s culture, encouraging executives to provide regulators with a wide window of information that anticipates their questions.