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JPMorgan CEO Dimon survives votes on pay, chairmanship
Says bank’s mistakes ‘self-inflicted’
TAMPA, Fla. — The CEO of JPMorgan Chase survived a shareholder push Tuesday to strip him of the title of chairman of the board, five days after he disclosed a $2 billion trading loss by the bank.
CEO Jamie Dimon also won a shareholder endorsement of his pay package from last year, which totaled $23 million, according to an Associated Press analysis of regulatory filings.
Most of the shareholder ballots were cast in the weeks before Dimon revealed the trading loss.
His pay package passed with 91 percent of the vote. The vote to strip him of the chairman’s title won only 40 percent support. The bank did not announce separate results from before and after the loss was revealed.
Dimon was confronted at the meeting by shareholders upset about the trading loss, which has rattled investor confidence in the bank and complicated JPMorgan’s efforts to fight tougher regulation of Wall Street.
Rev. Seamus Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, said that investors had heard Dimon apologize before for the foreclosure crisis and other problems.
“We heard the same refrain: We have learned from our mistakes. This will never be allowed to happen again,” Finn said. “I can’t help wondering if you are listening.”
Lisa Lindsley, director of capital strategies for an influential union of public employees that is also a major JPMorgan shareholder, said independent board leadership was in shareholders’ best interest.
“An all-powerful CEO is his own boss,” she said. “Looking for an infallible CEO is a fool’s errand.”
Most large American companies combine the jobs of chairman and CEO, but shareholders have pushed in recent years to separate them. About one in five Standard & Poor’s 500 companies separate the jobs.
Supporters argue that an independent chairman can provide a check on the CEO’s power. Shareholders also frequently push for separation at turbulent times for a company.
In JPMorgan’s case, the move to separate the jobs was put on the ballot before the $2 billion loss was unearthed. It was also on the ballot last year, but it received far less support then, 12 percent.
JPMorgan stock climbed throughout the morning and was up 3 percent by midday, on a day when the broader stock market was up only slightly. Investors pummeled JPMorgan stock in the first two trading days after the loss was revealed, driving it down 12 percent and wiping out almost $20 billion in market value.
A law enforcement official said that the FBI’s New York office is heading an inquiry by the Justice Department into the JPMorgan loss. The official, who was not authorized to speak about the decision, spoke on condition of anonymity.
The official characterized the inquiry as preliminary.
There was a heavy police presence at the meeting, in an office park east of downtown Tampa. Protesters were there as well, including some who threw eggs at a poster with Dimon’s picture on it.
“We wanted to let Jamie Dimon know how we feel about what big banks have done to our economy,” said Marilyn Lyday, a member of the protest group Occupy Orlando.
Dimon got something of a vote of confidence from President Barack Obama, who appeared on ABC’s “The View” for an episode airing Tuesday. Obama used the appearance to press for tighter regulation of Wall Street.
A part of the 2010 financial overhaul legislation known as the Volcker rule is designed to prevent banks from placing bets for their own profit, a practice known as proprietary trading.
The idea is to protect depositors’ money, which is insured by the government. If a bank’s losses wiped out those deposits, the government would be on the hook.
Former Federal Reserve Chairman Paul Volcker, for whom the rule was named, wanted speculative trading by investment banks to be separated from the deposit-taking and lending business of traditional commercial banks.
In Washington, Treasury Secretary Timothy Geithner said JPMorgan’s trading loss strengthens the case for tougher rules on financial institutions, as regulators continue writing rules from the 2010 law.
Geithner said that the Federal Reserve, the Securities and Exchange Commission and the Obama administration are “going to take a very careful look” at the JPMorgan incident as they implement the rules.
“I’m very confident that we’re going to be able to make sure those come out as tough and effective as they need to be,” Geithner said. “And I think this episode helps make the case, frankly.”
At the annual meeting for the investment bank Morgan Stanley, which took place Tuesday in upstate New York, CEO James Gorman appeared to allude to the JPMorgan trading loss when he said: “Events of the last few days remind us that risk levels remain high in the global markets.”
He noted twice that Morgan Stanley has jettisoned or is in the process of dumping all of its businesses that do proprietary trading, or trading for the bank’s own profit.
Gorman also said, unprompted, that the bank maintains the right to take back pay from executives who act improperly. Gorman was confronted by shouting protesters who said the loss at JPMorgan was proof that banks are out of touch with their customers.
On Monday, Ina Drew, JPMorgan’s chief investment officer and one of the highest-ranking women on Wall Street, left the bank. Drew oversaw the trading group responsible for the $2 billion loss.
• Pallavi Gogoi reported from New York. AP business writer Christina Rexrode in New York and Associated Press writers Tom Hays in New York and Andrew Taylor in Washington contributed to this report.
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