Jamie Dimon faces shareholder vote on JP Morgan role
Jamie Dimon faces a direct challenge to his iron grip on JP Morgan Chase when shareholders vote on whether to split his role as chairman and chief executive just days after the bank stunned Wall Street with a $2bn trading loss.
The Wall Street bank's shock loss will have increased the determination of those investors a backing proposal to split the roles that was tabled earlier this year and that will be voted on at the bank's annual shareholder meeting in Tampa, Florida.
The California Public Employees' Retirement System (Calpers), one of the biggest pension funds in the US, said it will be backing calls to split the roles at the top of the bank.
"If the chairman was independent the board may be able to exercise stronger oversight of management," Calpers said.
Having built a stellar reputation for his ability to manage risk and an attention to the details of the bank's operations, Mr Dimon will be under intense pressure to explain to shareholders how the bank lost $2bn and who will be held accountable. Ina Drew, who oversaw the division that made the losing bets, quit the bank yesterday.
In a filing to shareholders last month, JPMorgan Chase said that its "goal is not only to manage the dynamic risks of the firm, but also to create a culture of risk awareness and personal accountability."
Mr Dimon, who has held the roles of chairman and chief executive since he took charge at JPMorgan in 2006, is also likely to face questions about whether he encouraged the division that made the trades to put on riskier bets. The bank insists that the positions that backfired were hedges intended to reduce the bank's overall risk, rather than bets designed exclusively to reap profits.
"He frankly screwed up big time," says Bill Cohan, a former investment banker and author of several books on Wall Street. "It definitely shakes this 'King Jamie' image."
The disclosure of the losses after the US stock market closed wiped almost $20bn from the bank's market value on Friday. Analysts said that the steep share price fall reflects the damage to the reputation of a bank which, under Mr Dimon, has been considered one of the best managed on Wall Street.
"The stakes are too high to leave Jamie Dimon unsupervised," said Gerald McEntee of AFSCME, a union whose pension fund will propose the split at today's meeting. "Shareholders need to act together and tell the board that we want meaningful controls over risk and real oversight of management."