A lot of people hoped Jamie Dimon, the chairman and CEO of JPMorgan Chase, would lose one or both of those titles last week. Most of those people, however, were not JPMorgan shareholders.
Last Tuesday, those shareholders overwhelmingly voted to keep Dimon’s dual roles united in his hands, rather than to split them. Dimon had previously suggested he might resign entirely if the measure to split his duties passed. Only 32 percent of shareholders voted for the split, down from 40 percent a year ago.
Dimon’s win prompted a chorus of responses from those who disapprove, which ranged from the incredulous to the angry. Richard Eskow blogged at the Huffington Post: “What’s Wrong With Jamie Dimon is What’s Wrong With America.” Steve Denning at Forbes asked, “Jamie Dimon: Dr Jekyll Or Mr Hyde?” The Daily Beast’s Daniel Gross wrote a column that carried the succinct, if glib, headline, “Jamie Dimon to Shareholders: Suck It.”
Yet the majority of JPMorgan shareholders evidently don’t feel that Dimon has let them down. So Dimon’s detractors are furious at the company’s owners for keeping him in charge. The nerve of those shareholders, acting like they own the place!
Those shareholders know how to express displeasure with JPMorgan’s governance when they feel it. At the same meeting, three members of the board’s risk committee received less than 60 percent support, prompting the board’s presiding director, Lee Raymond, to tell shareholders to “stay tuned” for future changes in the committee’s composition.
So the shareholders want, and will probably will get change - but they don’t want to change Dimon’s responsibilities. This is probably because over the past five years - which is to say, since the early days of the financial crisis - JPMorgan stock has appreciated more than 20 percent. Wells Fargo, up more than 40 percent, has done better, but Wells Fargo has only a minor presence outside the U.S. A more accurate comparison would be against Citibank, which has fallen around 80 percent, or Germany’s Deutsche Bank, down nearly 60 percent.
The $6-billion “London Whale” loss last year was an embarrassment for Dimon and JPMorgan. But good businesspeople keep individual events in their greater context. In this instance, the context is that, despite the loss, JPMorgan continues to post solid profits in a challenging regulatory environment. According to Bloomberg, the bank has posted record results for three straight years. And at the same annual meeting where shareholders voted not to split Dimon’s duties, JPMorgan announced that its second-quarter dividend will be 27 percent higher than that of the previous quarter.
Dimon deserves to be held accountable for JPMorgan’s failures, but he also deserves credit for its successes.
JPMorgan is not a paragon of excellent corporate governance, nor is it an example of outstanding citizenship for a financial institution. On the other hand, it is not an egregious outlier, either. If Dimon has managed, in a terrible environment for global banks, to run a global bank that performs more or less like a large national bank, it demonstrates the kind of talent you want at the head of a big company.
Which is exactly why his shareholders kept him there.