“The role of CEO and chairman should be separate” is a well-worn bromide that the shareholders of J.P. Morgan refused to swallow at their most recent annual meeting. Despite intense pressure by some shareholder groups, J.P. Morgan’s CEO and chairman Jamie Dimon will not be stripped of the chairman title this year.
Dimon’s time with J.P. Morgan: huge successes and a whale of a scandal
Dimon has held the role of both CEO and chairman with the nation’s largest bank since 2006. He was widely hailed for his handling of the financial crisis, and J.P. Morgan has reported record earnings for three years in a row. Nevertheless, Mr. Dimon attracted some tough press due to the notable “Whale” trading scandal in 2012. One result, promoted by a group of unhappy shareholders, was a non-binding advisory vote to split the role of the CEO and chair.
Although they garnered 40 percent of the vote, the dissident shareholders did not prevail in 2012. They tried again this year, and failed – this time garnering only about 32 percent of the vote. This was notwithstanding the weight of well-known proxy advisory services such as ISS and Glass-Lewis in favor of the split.
Is this the beginning of the current governance trend in the United States to split the role of the CEO and chairman?
Probably not. Even though there is no conclusive empirical evidence that spitting the CEO and chairman role leads to better results for shareholders, the pressure to split these roles will not abate. For many, splitting the role “makes sense” in the context of the board’s being the ultimate arbiter of whether a given CEO keeps his job or is replaced. Others take a different view. For example, some boards have attempted to solve the corporate governance concerns raised by the CEO’s holding the chairman title by elevating an independent director to the status of being the “lead director.” However, and notwithstanding the recent J.P. Morgan vote, the trend is clearly toward separating the CEO and chairman roles.
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