Two years ago, when CtW Investment Group began asking JPMorgan Chase & Co. to drop several members from its corporate board, Michael Pryce-Jones, a senior analyst at the activist shareholder, admits the effort was a thankless task. Pryce-Jones says other investors tended to meet his group’s proposal with puzzlement, silence or scorn.
“When we tried to do this in 2011, there was zero appetite,” he told The Huffington Post. “Everyone was still seeing Jamie Dimon in a positive light. There was a halo around JPMorgan.”
This year, the response to his campaign has been markedly different, Pryce-Jones said.
“People tell us they’ve actually taken time to look at this board’s composition and they’re dumbstruck,” he said. “People have turned and said to us, 'We didn’t know it was so bad,' or, 'We never realized the board was so inexperienced.' It’s a regular thing we hear now."
Pryce-Jones’s experience hardly appears unique. Several activist investors that spoke to The Huffington Post claim JPMorgan’s shareholders have become increasingly restless with the bank’s management over the past year, in light of the seemingly unending media and congressional attention to scandals within the institution. These activist investors, who have sponsored specific reforms of the corporate board structure at JPMorgan, claim 2013 could be the year their challenges to the bank’s management are finally successful.
They point to the bank’s upcoming annual shareholder meeting as an event that could usher in major changes, including the possibility some directors will be forced to resign or that bank CEO and chairman Jamie Dimon could be made to give up one of his titles.
JPMorgan itself has been meeting with shareholders as a prelude to its annual meeting later this month, as is customary for public firms. A representative of the bank declined to characterize those meetings with investors, given that they are private.
At last year's annual shareholder meeting, a proxy proposal to split the role of CEO and chairman was soundly defeated. Since then, and in spite of the fact that the firm is constant headline fodder, shares have risen from around $36 to a closing price of $47.57 on Friday, during a period of record profits.
But activist investors claim the dynamic is changing. “Our sense is that investors who previously opposed the proposal have been listening this year,” said Michael Garland, assistant New York City comptroller.
As overseer of New York City’s retirement funds, which have over $500 million invested in JPMorgan stock, Garland’s office is sponsoring a proposal to split the bank's CEO and chairman roles.
“People may have been persuaded by performance last year,” Garland explained of the measure's failure at 2012's annual meeting. “There are big institutions that are generally disinclined to vote against management when things are going well.”
But performance, Garland explains, has been marred by revelations of JPMorgan's $6 billion loss on a derivatives bet gone wrong, as well as recent disclosures that several federal agencies are investigating the bank for a variety of regulatory mishaps.
“When you’ve got eight different agencies conducting investigations and you are unable to focus on the work at hand, action is required,” Garland said. “There needs to be a process to restore the confidence and credibility with regulators.”
Lisa Lindsley is director of capital strategies at the American Federation of State, County and Municipal Employees, a shareholder that is also pushing the proposal to split the CEO and chairman roles. She said the number of legal and regulatory issues facing JPMorgan have turned the institution into the “Lindsay Lohan of banks.”
“It’s good for shareholders that these stories have come out,” Lindsley said. “There’s been a shift in people’s perception about Jamie Dimon, and how he’s supposedly the only person that can be both chairman and CEO."
Lindsley pointed to an investigation led by Sen. Carl Levin (D-Mich.) of the bank's "London Whale" losses that found the federal Office of the Comptroller of the Currency had downgraded its rating of JPMorgan's management team.
“It’s really a shame that we had to count on Senator Levin to let us know what was going on inside JPMorgan,” Lindsley said.
Lindsley and others interviewed for this article noted that particular fact speaks to wider issues of transparency.
“No one on the outside really knows what’s been going on at the bank,” said Pryce-Jones, the CtW analyst. “Suddenly these things come out and people realize even those on the inside don’t know what’s going on.”