Shareholders of the nation's biggest banks by assets likely will be asked to vote this spring on a proposal by the American Federation of State, County and Municipal Employees and pension funds in New York City and Connecticut that JPMorgan name a board chairman who has no ties to management.
Though JPMorgan Chase names an independent director each year to preside over meetings of the board, Jamie Dimon currently serves as both chairman and chief executive officer.
A similar proposal last year received a 40% favorable at JPMorgan's annual meeting.
The proponents, who control roughly 16.5 million of the company's shares, say the proposal reflects their concerns with oversight of management by the company's board following a $6.2 billion trading loss last spring, a recent regulatory order calling on JPMorgan Chase to strengthen protections against the bank's being used for money laundering, and what the coalition charges is a failure by the company to show it can manage the size and complexity of its balance sheet.
According to the proponents, JPMorgan has become too big and complex for its own good. "We think it goes to the issue of risk management," Lisa Lindsley, AFSCME's director of capital strategies, told American Banker. "We think that an independent board chair is a best practice in general but particularly at JPMorgan where there has been this history of lack of good risk management and scandal that shows shareholders really need an independent person representing their interests running the board."
A JPMorgan spokesman declined to comment on the proposal. In recommending a vote against the proposal last year, the board told shareholders that the company was "functioning effectively" under its current structure. The board also noted that all directors are independent with the exception of the chairman.
While the proposal is expected to be voted on by shareholders at the company's annual meeting, JPMorgan has asked the Securities and Exchange Commission for permission to withhold from the company's proxy materials another proposal by AFSCME that seeks a vote by shareholders on whether the bank should take itself apart.
The SEC has yet to rule on whether the breakup proposal belongs on the company's ballot.