Shareholder activists including state Treasurer Denise L. Nappier, who tried to force JPMorgan Chase Chairman and CEO Jamie Dimon to give up his chairman post, will have to be satisfied with a moral victory. Their bid fell short Tuesday at the company’s annual meeting.
Nappier, fiduciary of the $26 billion pension and trust funds, was among the ringleaders of the effort. Despite support from unions and other pension funds, the nonbinding vote to create an independent, non-employee chairman, was defeated with one-third of shares voting favoring the split.
The Connecticut funds hold 1.5 million JPMorgan shares, valued at $74.5 million as of April 30, and $38 million in JPMorgan debt, Nappier’s office said.
Management and the JPMorgan board, and of course, Dimon himself, had worked hard to defeat the measure, so the one-third rebuke is something of an accomplishment. Still, a similar bid got 40 percent of shares a year ago, and some had hoped that the scandal of 2012, in which a London trader lost $6 billion, would lead to a larger vote for a split.
Nappier’s statement, in part:
“The Connecticut Retirement Plans and Trust Funds and many other shareholders realize that highly integrated companies such as JPMorgan Chase, in order to ensure long-term value, should be managed by a CEO overseeing the business, and an independent chairman leading the board in its oversight and evaluation of the CEO’s performance. Independent Board leadership is an important governance variable to ensure that the company looks beyond today’s profits to future growth and success.”
Nappier sent Suzanne Hopgood, a corporate governance expert, former chair and CEO of a New York Stock Exchange company, and chairwoman of the Capital Region Development Authority, to represent her office at the JPMorgan shareholder meeting in Tampa, Fla.
Questions by shareholders about the board operations lasted more than an hour, said Hopgood, who conveyed Nappier’s respect for Dimon and his abilities, but also her concerns “that he has two positions.”
“They are two very difficult, challenging jobs,” Hopgood said.
Three directors on the risk committee were re-elected with votes of between 53 percent and 59 percent, Hopgood said, which are low totals reflecting the shareholders’ concerns.
Nappier is a veteran activist in corporate governance, especially this issue — the splitting of the roles of chairman and CEO. She led a successful campaign to persuade The Walt Disney Co. to split the roles in 2005, a move the company later reversed and Nappier is trying to restore, but her bid was turned back in March.
As with all of her activism, Nappier argues that her interest is in shareholder returns, not political points. Tuesday, she cited a 2012 report by GMI Ratings that said 5-year returns were 28 percent higher at companies with a separate CEO and board chair than at companies with a consolidated office.
Nappier’s office, citing shareholder advisory firm Institutional Shareholder Services, said 21.5 percent of Standard & Poor’s 500 firms had an independent chair in 2012, up from 18 percent two years earlier.