The House of Morgan is about to have to have some pissed off people in upstate New York and the west coast of Florida on its hands. Read more »
Dimon has also been a fierce critic of President Obama’s economic policies, including parts of the Dodd-Frank banking reform bill. Many union pension funds as well as public officials running large pension funds have vocally supported the president’s economic and regulatory policies, and the recent shareholder vote was designed to quash Dimon’s public criticism of these policies, people inside JP Morgan say.
That’s from Charlie Gasparino’s report today that the House Financial Services Subcommittee is going to hold a hearing “into whether proxy advisory firms are pushing political agendas rather than serving shareholder interests,” which I guess is no sillier a hearing than most other hearings. More things:
Executives at many companies have complained to Congress that such battles are fraught with politics, with advisory firms often pushing the political agendas of some of their biggest shareholder clients at union and public pension funds.
Jamie Dimon’s continuing employment as chairman and CEO of JPMorgan Chase may or may not be an interesting case study in shareholder rights and corporate governance, but the most interesting question in bank governance is really “who cares what shareholders think?” Like: a bank is a bunch of depositor and creditor money, largely backed by explicit and implicit government guarantees, topped with a thin layer of shareholder-capital icing, and run for the benefit of that layer of icing. The shareholders are in charge because that’s how it’s done in every other sort of company, and because they bear the riskiest risk, but they certainly don’t bear the most risk on a sheer notional basis. And, since their shares are an almost at-the-money option on a vast pile of assets, they tend to have a fondness for volatility that other stakeholders might find disconcerting.1
Here’s The Epicurean Dealmaker on chairmanshipery:
The CEO is supposed to be the chief employee, leading his or her organization to deliver on the agenda and objectives the Board of Directors has set. The CEO is an operating executive.
The Chairman, on the other hand, is supposed to lead the Board of Directors in setting the agenda, strategy, and objectives of the corporation, in response to its employers, the shareholders, and all the other myriad stakeholders (employees, regulators, government officials, vendors, community members, and customers) which have a say or a stake in the activity of the firm. The Chairman and other directors of the corporation are stewards. They are not supposed to get down in the weeds, day to day, operating the various parts of the business. That is the CEO’s job. But as stewards they are supposed to think about the what-ifs, the perils and opportunities that may or may not confront the firm in the future, and the problems and threats which may be festering beneath the glittering surface of excellent corporate performance.
One way of reading that is that the CEO goes to work every day to make money for the shareholders: his job is to increase net income. Read more »
Jamie Dimon Pretty Happy He Didn’t Fire Off That Resignation Letter Last Night After His Second Bottle Of WineBy Bess Levin
He said he was going to quit if stripped of the chairman role, and god damn it, he meant it but luckily: 1. It did not come to that and 2. He got distracted watching that Harlem Shake video Lloyd sent him and fell down a rabbit’s hole of different versions on YouTube, waking up this morning with his face on the keyboard and an email that began “I believe it was John Pierpont Morgan who famously said, ‘You can all go fuck yourselves’” saved to drafts. Read more »
“’They’re jealous,’” former Bear Stearns CEO Jimmy Cayne says about Dimon’s critics, in a rare interview since JPMorgan bought the foundering investment bank in March 2008. “’They’re looking at themselves as being unfortunate and being underpaid and being underappreciated, and if there’s a piñata out there to take a swipe at, who better than somebody who’s got everything that they don’t?’” [BusinessWeek]
JPMorgan Shareholders Will Find Out If Jamie Dimon’s Gonna Stay Chairman When Jamie Dimon Decides To Tell Them, Okay?By Matt Levine
Following the appeals of activist investors, shareholders of office landlord CommonWealth REIT on Tuesday forced the resignation of a trustee on the company’s board, Joseph Morea, by failing to give him a majority of votes.
The rest of the board didn’t need to look far for a replacement. On Wednesday, the board announced it had voted Morea right back into his old seat.
Morea lost a binding shareholder vote on whether he could keep his job – “CommonWealth’s bylaws require directors to resign if they don’t get a majority” – and the board told the shareholders to go fuck themselves.1
The sense I’m getting is that Jamie Dimon is going to win his can-he-still-be-chairman vote, which I find a little disappointing – not because I want him to stop being chairman, but because the truly Dimonesque move here would be to lose the vote and stay chairman anyway. “Think I’m too unconstrained? I’ll show you unconstrained!” etc. It would fit well with this: Read more »
Confidential To JP Morgan Shareholders: Jamie Dimon Took His Own Non-Binding Vote And Early Results Indicate You People Might Wanna Be Careful What You Wish ForBy Bess Levin
You wanna play hardball? James Dimon is game. Read more »
- if a majority of shareholders vote in favor of the nonbinding proposal to strip him of his role as chairman of the board, and
- he remains chairman of the board, then
- he’s probably too powerful!
Let’s find out!
Honestly, who cares who cares who cares who cares if JPMorgan’s board has an independent Chairman or just an independent Presiding Director? The board’s job is to keep an eye on Jamie; if it failed to do that then giving it a fancy new title doesn’t seem likely to improve performance. Is it your impression that Jamie Dimon, who apparently rides roughshod over pissant Presiding Directors,1 will nonetheless be meek and subservient when faced with a Chairman?
Discussion about this proposal is confused because some people think that having an independent chairman is a good thing in all circumstances, or at least say they do; CalPERs’s governance czar, for instance, believes that “There’s a fundamental conflict in combining the roles of chairman and C.E.O.” and so CalPERS will vote to split the roles at JPMorgan just as they did last year. Others think that, y’know, it depends on the people. The people here would presumably remain the same though there’s some rumbling that Dimon would take his toys and go home if he couldn’t be chairman too.
Outside of CalPERS, though, the universal-good-governance theory doesn’t seem to move anyone much. Here, if you’re interested, are JPMorgan’s top 20 shareholders: Read more »
Yesterday JPMorgan research released a 328 page report arguing that global tier 1 investment banks were “un-investable,” and today JPMorgan reported record first-quarter earnings of $1.59 per share versus $1.40 consensus, so I guess it sort of looks like there’s a disconnect. But not really? Here are the analysts on banking regulation:
We believe Tier I IBs are un-investable at the moment and the right time to make a switch into Tier I IBs would be if we get more clarity on regulations providing us comfort around the ROE potential of Tier I IBs or we see IBs having to spin-off their businesses leading to capital return to shareholders. We believe Tier I IBs will continue to remain more exposed to the IB regulatory changes as they try to “defend their turf” while Tier II IBs have the option to step back more aggressively.
Jamie Dimon, meanwhile, responded to analyst questions this morning by more or less begging the analysts themselves to call their congresspeople and defend JPMorgan’s turf, arguing that banks are safer than ever, that JPMorgan’s size and scale and universality provides services that clients want and is good for the world, and that “I hope at one point we declare victory and stop eating our young.”1
The analyst report is a fascinating bit of business. The claim is that global investment banking – by which they mean of course FICC trading – will see market share move toward top-tier banks, driven mainly by the commoditization of the FICC business with clearing and greater price transparency around derivatives, as well as higher capital requirements and more complex and Balkanized regulation around trading activities. The result: Read more »