J.P. Morgan AGM: how US institutions have voted on governance proposals

Banking giant faces shareholders amid trading losses crisis

J.P. Morgan Chase faces investors at its annual meeting in Florida today, the first public opportunity for investors to interact with the US banking giant since its $2bn (€1.55bn) trading losses were revealed.

Even before the crisis, which has cost the job of Chief Investment Officer Ina Drew, shareholders were already set to vote on a series of corporate governance resolutions put forward by investors. In total there are seven shareholder motions on the agenda today.

Key amongst these is a shareholder motion tabled by the AFSCME Employees Pension Plan calling for an independent chairman.

The AFSCME argued in its submission, tabled before the crisis erupted, that a combined chairman and CEO such as J.P. Morgan’s Jamie Dimon, “weakens a corporation’s governance which can harm shareholder value” and undermines the board’s oversight of management.

“J.P. Morgan Chase shareholders need to act together and tell the board that we want meaningful controls over risk and real oversight of management,” said AFSCME President Gerald McEntee on May 11. “The stakes are too high to leave Jamie Dimon unsupervised… shareholders need to step in.”
The bank, in its April 4 proxy statement, advised shareholders to vote against the proposal saying its existing structure already provides oversight of management.

Major US institutional investors such as the California Public Employees Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS) and the Florida State Board of Administration disagree and have supported the proposal, according to voting disclosures.According to the Proxy Democracy website, the AFSCME motion also has the backing of Christian Brothers Investment Services and Calvert Funds and Domini Social Funds.

“CalPERS believes if the Chairman was independent the board may be able to exercise stronger oversight of management,” the largest US pension fund says on its website.

Domini Social Funds has also voted against the re-election of Dimon as a director, according to Proxy Democracy. Calvert Fund and Domini voted against ratifying J.P. Morgan’s executive pay, although CalPERS, CalSTRS and the Florida SBA voted in favour. It’s likely the voting decisions were made before the full extent of the bank’s losses became known.
The Investors Against Genocide (IAG) proposal on preventing investments in companies that contribute to genocide or crimes against humanity also has broad support.
Also on the agenda at the meeting is a proposal from the Board of Pensions of the Presbyterian Church calling on the bank to review its fair lending policy. This has the backing of CBIS, Calvert and Domini but not CalPERS, CalSTRS or the Florida fund.
The proposal from Domini Social Equity Fund calling for a report on political contributions is supported by CalPERS and Calvert.
Late yesterday it emerged that law firm Robbins Geller Rudman & Dowd has filed a class action suit against the bank in the US District Court for the Southern District of New York. Robbins Geller, which is seeking an investor to act as lead plaintiff, says J.P. Morgan “misrepresented and/or failed to disclose” that its Chief Investment Office “engaged in extremely risky and speculative trades that exposed JPMorgan to significant losses”.