JPMorgan has advanced more than 20 percent this year, closing today at $53.02. Analysts including Mayo predicted that Dimon’s departure could cause the stock to drop 10 percent or more in the absence of a clearly identified replacement.
“If an operation the size of JPMorgan depends on one person, that is itself a sign of board failure,” said Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor. The company’s lack of rebuttal shows “there is no strong independent lead director, there is no strong special committee or independent group on the board that’s looking out for the interests of shareholders,” he said.
JPMorgan’s priority is developing a “competent and capable successor,” Raymond said. “I hope that time is much into the future and I have no illusions that we will be able to clone Jamie.”
Dimon told the audience that turnover in his top ranks was due in part to the board pressing him to put people in tough jobs to see if they could be future CEOs.
The last time shareholders of a large U.S. bank opted for divided oversight was in April 2009, when Bank of America Corp. investors voted to strip the chairman’s title from CEO Kenneth Lewis in the aftermath of the Merrill Lynch & Co. takeover and federal bailout. Lewis had no successor in place when he announced later that year he would step down as CEO.
Lloyd C. Blankfein, chairman and CEO of Goldman Sachs Group Inc., avoided a similar vote on his firm’s proxy statement this year by agreeing with CtW to expand the duties of lead independent director James Schiro. A May 2010 vote on whether Blankfein should keep both the chairman and CEO roles, which took place three weeks after the Securities and Exchange Commission sued that firm for fraud, was supported by only 19 percent of the votes. The company hasn’t faced another vote on the matter since then.
Dimon received backing from a roster of high-profile investors including Home Depot Inc. founder Ken Langone, who called him the “finest” CEO in the U.S., and billionaire Warren Buffett, the Berkshire Hathaway Inc. chairman and CEO who has called Dimon’s annual investor letter a must-read.
Raymond and former Johnson & Johnson Chairman and CEO William C. Weldon, who heads the bank’s corporate governance and nominating committee, publicly lobbied for Dimon, writing in their first-ever direct appeal to shareholders that splitting the jobs “could be disruptive” and hurt investors.
Proxy advisers at Glass Lewis & Co. and Institutional Shareholder Services advised investors to vote for a separate chairman as well as to oust some directors.
At the conclusion of the shareholder event, attendees were serenaded with Bruce Hornsby’s 1980s hit, “The Way It Is,” which includes the lyrics, “That’s just the way it is ... some things will never change.”
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