Institutional Shareholder Services, the influential advisory firm, has recommended that JPMorgan Chase investors withhold their support for three directors, citing “material failures of stewardship and risk oversight†after last year’s huge trading loss, Susanne Craig and Jessica Silver-Greenberg write in DealBook. The directors, David M. Cote, James S. Crown and Ellen V. Futter, serve on the board’s risk policy committee. Only under “extraordinary circumstances†does I.S.S. consider recommending that shareholders oppose directors, the advisory firm said in its report.
“The board appears to have been largely reactive, making changes only when it was clear it could no longer maintain the status quo,†I.S.S. wrote in its 33-page report on JPMorgan, released late on Friday. “The company’s board is in need of refreshment and it should begin searching for seasoned directors with financial and risk expertise.†Several big investors interviewed over the weekend said they were struck by the harshness of the criticism, DealBook writes. I.S.S. also supported, as expected, a proposal to split the roles of chairman and chief executive, a move that could strip Jamie Dimon of the dual role. (On CNBC on Monday, Warren E. Buffett reiterated his position that Mr. Dimon should keep both roles.)
As JPMorgan shareholders consider how they will vote ahead of the annual meeting this month, some are also taking aim at individual directors. “On Friday, the CtW Investment Group, which represents union pension funds and owns six million shares in JPMorgan, said it planned to vote against the three directors on the risk policy committee and the head of the audit committee,†DealBook writes.
In a statement on Sunday, JPMorgan disagreed with I.S.S.’s position and defended the actions of the board after the trading loss last year by the bank’s chief investment office in London. The statement said, in part: “While the company has acknowledged a number of mistakes relating to its losses in C.I.O., an independent review committee of the board determined that those mistakes were not attributable to the risk committee.â€
BMC NEAR A BUYOUT  | A group of private equity firms led by Bain Capital and Golden Gate Capital is near a deal to buy BMC Software, DealBook’s Michael J. de la Merced reported on Sunday, citing people briefed on the matter. A deal would come nearly a year after Elliott Management, an activist hedge fund, called for the technology company to sell itself.
The buyout group is expected to pay around $46 a share, one of the people said, valuing the company at over $6.5 billion. A deal could be announced as soon as Monday, though these people cautioned that talks could still fall apart. The company’s shares closed on Friday at $45.42. “If completed, a deal would signal the resurgence of the private equity industry,†Mr. de la Merced writes.
SUCCESSION IS A FOCUS OF BERKSHIRE MEETING  | Though little news emerged from the annual meeting of Berkshire Hathaway over the weekend, many of the questions focused on what life would be like when Warren E. Buffett is no longer running the company. Still, for the chief executive of NetJets, Jordan Hansell, who says he enjoys a long leash under Mr. Buffett, the succession issue only “rarely†crosses his mind. “Warren and Charlie have consistently held the view that Berkshire will remain the same,†Mr. Hansell said.
But the “credentialed bear†at the meeting, the hedge fund manager Douglas A. Kass, evinced concern that a Berkshire without Mr. Buffett would need to be more centrally operated or even possibly broken up. Mr. Buffett contended that there would be very little change to the company, adding that it was actually easy to oversee now.
So how did Mr. Kass do? “I thought it went very well,†he told DealBook in an interview. The questions for Mr. Buffett “were so direct and so pointed that he addressed them all, but maybe not 100 percent. Maybe closer to 80 percent,†Mr. Kass said.
ON THE AGENDA Â |Â Apollo Global Management reported earnings. Bill Gates is on CNBC at 8:15 a.m. Hedge fund types are headed to Las Vegas for the SALT conference this week.
KODAK’S FUZZY FUTURE  | “When Eastman Kodak emerges from bankruptcy this summer or fall, it will be a shadow of the blue-chip corporate giant it once was,†Julie Creswell writes in DealBook. “A celebrated company whose little yellow packages of film documented generations of birthday parties, weddings and anniversaries, the new Kodak will be more commercially focused, providing printing and imaging services to businesses as well as film to the movie industry.â€
“Consumers will probably still be able to find Kodak-brand film in vacation spots around the world. They will still be able to buy digital cameras bearing the Kodak name. And they will still be able to download and print their digital pictures at kiosks in their local drugstores. But those businesses will no longer be owned or controlled by Kodak. As part of the more than yearlong bankruptcy process, they were sold to others.â€
As Instagram Grew, Bumps on the Road to an Acquisition  | In Vanity Fair, Kara Swisher chronicles the story of Instagram’s development, before it ultimately was sold to Facebook. There had been interest from Jack Dorsey, the Twitter co-founder. “After talking a while in front of a campfire over drinks one night, Dorsey and Twitter’s then chief financial officer, Ali Rowghani, proposed to Systrom what they considered a formal offer to buy Instagram. The price was in the mid-$500-million range, a combination of restricted and common stock â€" but no cash,†Ms. Swisher writes.
“While Dorsey and Rowghani recall handing Systrom an actual term sheet, Systrom insists they did not, instigating a he-said-he-said that had serious and unpleasant consequences later.†VANITY FAIR
Gore’s Riches  | Al Gore, who had a net worth of about $1.7 million in 1999, “made an estimated $100 million in a single month†this year, according to Bloomberg News. BLOOMBERG NEWS
In a Verizon Deal, Would a Premium Be Appropriate?  | Some investors of Verizon Communications said “they could be happy†if the company paid a premium for Vodafone’s stake in Verizon Wireless, Reuters reports. REUTERS
Glencore Shares Rise on Investor Optimism of Cost Savings  | In its first day of trading on Friday, the share price of the newly combined Glencore Xstrata rose more than 4 percent, giving the company a market valuation of almost $70 billion. DealBook »
Mario Gabelli, the $750 Million Man  | Mario J. Gabelli, the chairman and chief executive of Gamco Investors, has made more than three-quarters of a billion dollars in total compensation. DealBook »
Credit Suisse Accuses a Former Employee of Stealing Secrets  | Credit Suisse claims that Agostina Pechi, a former vice president of emerging markets, took trade secrets when she went to work for Goldman Sachs. BLOOMBERG NEWS
Houlihan Lokey Hires Lazard Banker to Lead Its Asian Unit  | The investment bank Houlihan Lokey has appointed David Timblick, a 14-year veteran of Lazard, to head its business in Asia as it seeks to expand in the region. DealBook »
Scrutiny Falls on a Pioneer at JPMorgan  | Blythe Masters, who helped pioneer the use of credit derivatives, is cited in a Federal Energy Regulatory Commission document looking at the bank’s trading in the California and Michigan electricity markets. DealBook »
TPG and Warburg Said to Explore Options for Neiman Marcus  | Bloomberg News reports: “TPG Capital and Warburg Pincus L.L.C. are exploring a sale or public offering of Neiman Marcus Group Inc. eight years after acquiring the luxury retailer, according to two people familiar with the matter.†BLOOMBERG NEWS
Cooperman Joins the War of Words Over Herbalife  | Leon G. Cooperman of Omega Advisors said at a dinner over the weekend that William A. Ackman was “foolish†for telling the world about his bet against Herbalife, Fortune reports. If Mr. Ackman were to change his mind privately, Mr. Cooperman said, then “someone else who followed his advice and shorted the stock could turn around and sue because they were misled.†FORTUNE
I.S.S. Backs Elliott in Fight Over Hess’s Board  | In a report published on Thursday, Institutional Shareholder Services backed virtually every argument that Elliott has made for its five director nominees since beginning its fight earlier this year. DealBook »
Record Number of Banks on I.P.O. of Chinese Securities Firm  | China Galaxy Securities has 21 banks helping it go public in Hong Kong, Reuters reports. REUTERS
A Dose of Skepticism on Facebook  |Â
BARRON’S
In France, a Billionaire Rails Against the Establishment  | Xavier Niel, a French Internet entrepreneur, has emerged as “an opportunistic, controversial visionary whose low-cost Internet service provider and mobile network have made the Internet affordable for millions of French consumers,†The New York Times writes. NEW YORK TIMES
In Silicon Valley, Security Should Be a Top Priority  | “When technology companies have become the prime targets of rogue governments and hackers, the ideologies that drive these companies to provoke could end up disrupting these companies,†Nick Bilton writes on the Bits blog. NEW YORK TIMES
Supreme Court Is a Friend to Corporations  | The New York Times reports: “While the current court’s decisions, over all, are only slightly more conservative than those from the courts led by Chief Justices Warren E. Burger and William H. Rehnquist, according to political scientists who study the court, its business rulings are another matter. They have been, a new study finds, far friendlier to business than those of any court since at least World War II.†NEW YORK TIMES
Fed Governor Pushes to Strengthen Large Banks  | Daniel K. Tarullo has floated an idea that could affect banks that make heavy use of so-called wholesale markets by requiring them to hold extra capital. DealBook »
Growing Concern Slovenia May Need a Bailout  | The rise and fall of a star entrepreneur in Slovenia “have come to symbolize the way easy and cheap credit, combined with Balkan-style crony capitalism and corporate mismanagement, fueled a banking crisis that has unhinged a country previously praised as a regional model of peaceful prosperity,†The New York Times writes. NEW YORK TIMES
CommonWealth REIT, a Study in Entrenched Management  | “If the conflicts at CommonWealth are so glaring, why don’t shareholders agitate for change? Some have tried, only to encounter an array of barriers that appear to be set up to keep the outside managers’ lucrative contract in place and the company under their control,†Gretchen Morgenson writes in her column for The New York Times. NEW YORK TIMES
With Economy Sluggish, Business Charges Ahead  | The subpar economic recovery “can be traced to two of the three pillars of the American economy â€" consumers and the government. But the third, business, has made an impressive bounceback,†Floyd Norris writes in his column for The New York Times. NEW YORK TIMES
Drawing Lessons From an Economics Error  | Lawrence H. Summers writes about the work of Carmen Reinhart and Kenneth Rogoff, his colleagues from Harvard. WASHINGTON POST
