JPMorgan Chase CEO Jamie Dimon has rounded on “self-serving” shareholders and special interest groups hijacking annual meetings and making them a “complete farce” – although he does acknowledge the bank needs the “trust and respect” of its shareholders.
Dimon presents a litany of corporate governance issues in the bank’s new annual report.
Among them are:
• Self-serving shareholder activity and proposals not intended to benefit the company
• Shareholder meetings that are hijacked by special interest groups and become a complete farce
Dimon also called out “too much short-termism” at the expense of making “good, long-term investment s”.
He writes: “For more than two centuries, the American free enterprise system has led to enormous prosperity for our country: the creation of jobs, increases in wages and savings, and the emergence and growth of dynamic companies. Because well-managed and well-governed businesses are the engines of our economy, good corporate governance must be more than just a catchphrase or fad. It’s an imperative — especially when it comes to our publicly owned companies.”
He closes his 46-page missive by saying: “We know we have to earn the trust and respect of our shareholders, employees, customers and the communities we serve every single day. You can rest assured that we are devoted to doing this.”
He referred to the fact that the number of public companies has fallen 45% from 8,090 in 1996 to 4,381 in 2015 and that many private equity companies often stress that it is better to be owned by them because they operate with “commonsense corporate governance”.
He pointed to the ‘Commonsense Corporate Governance Principles’ group of senior business leaders including GM’s Mary Barra, State Street’s Ron O’Hanley, Warren Buffett, Vanguard’s Bill McNabb, Blackrock’s Larry Fink, Mark Machin of the CPP Investment Board and others that he says “that would foster the health of our public companies”.
It’s not the first time Dimon has taken on investors. In 2015 he called investors that turn to proxy advisors for voting guidance ‘lazy’, ‘irresponsible’ and ‘probably bad investors’ – that was in the wake of almost a third of investors voting against his pay package.RI went on to report shortly after this, though, that JP Morgan Asset Management (JPMAM) – the group’s fund management arm – used Institutional Shareholder Services (ISS) and that it had repeatedly voted against excessive executive pay.
Last year, the CEO-level Business Roundtable of which Dimon is a member, slammed investors with “social agendas”.
At its AGM last year, JP Morgan faced six shareholder resolutions. They were on: independent board chairman (filer: John Chevedden); vote counting (Newground Social investment); vesting for government service (AFL–CIO Reserve Fund); appoint a stockholder value committee (Bartlett Naylor); clawback amendment (John Chevedden); and executive compensation philosophy (Jing Zhao).
Norges Bank Investment Management, for example, voted not only against Dimon’s election and say-on-pay – but also FOR the proposal from ‘activist’ Chevedden.
PGGM also supported this saying: “One of the board’s primary responsibilities is to represent the interests of shareholders.” It also voted against Dimon. The Dutch giant also backed the AFL–CIO resolution on government service, arguing shareholders shouldn’t have to bear the costs of executives’ moving into government. Other backers included Christian Brothers Investment Services, the Florida State Board of Administration and Trillium AM.
PGGM also put its weight behind private shareholder Jing Zhao’s call for a pay policy with social factors. “Establishing social criteria as a broader component of senior executive pay setting decision-making would serve to further incentivize executives to ensure that company performance on such sustainability considerations, alongside financial factors, is appropriately aligned with management’s interests, the firm’s stated commitments to sustainability, and long-term corporate strategy,” PGGM said.
JPMorgan’s proxy statement for this year’s AGM hasn’t been released yet; the AGM is likely to take place next month. Link