The Pyrrhic victory Tuesday for Jamie Dimon is a defeat for governance. Just over two-thirds of JPMorgan shareholders voted to keep him as both chairman and chief executive at the bank’s annual meeting in Tampa on Tuesday. And Mr. Dimon and the board had to devote a considerable amount of time to preserving his titles rather than running America’s largest bank by assets. The episode perfectly illustrates the common sense behind separating the two roles.
Having a third of shareholders vote against Mr. Dimon is hardly an overwhelming vote of confidence. It is, though, a marked improvement from last year when 40 percent of shareholders voted for a split just weeks after the bank announced what turned into a $6 billion hit to revenue from the so-called London Whale trading fiasco.
The support comes after the directors lobbied hard â€" and very late in the day -- to keep Mr. Dimon at the helm of both the management team and the board. They had even gone so far as to warn that a change in leadership would be disruptive to the bank, unsubtly implying that Mr. Dimon might leave if he didn’t get his way.
There are more pressing concerns for the bank, from preventing similar losses to mending fences with regulators. Having the entire board be independent would make it a more credible check on the boss and help ensure the quest for profits doesn’t expose the bank and its shareholders to unnecessary risk.
Instead, the board’s presiding director, Lee Raymond, told shareholders at the meeting that what counts is how directors handled the crisis last year - in other words, admitting that he sees his role as purely reactionary. That should be a worrying signal to the bank’s owners.
At least some changes to the board’s risk committee look likely. Raymond hinted as much. Three directors - David Cote, James Crown and Ellen Futter - each won less than 60 percent of the vote for re-election.
If they are rotated out of the risk committee, or even leave the board, it will at least mark a small victory. But for Mr. Dimon, shareholders chose fear and personality over good corporate governance. That’s a big disappointment.
and Agnes T. Crane is a columnist and Antony Currie is an associate editor for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.
