JP Morgan Chase (JPM) faces an intensifying drumbeat for change ahead of its annual meeting this month in Tampa, Fla.
CtW Investment Group, a union-backed organization that owns roughly six million shares of JPMorgan Chase, has called on shareholders to vote against three directors on the risk policy committee and the head of the audit committee. The move was reported Friday by The New York Times.
Separately, Institutional Shareholder Services, or ISS, on Friday echoed the call for shareholders to vote against three directors on the risk policy committee. ISS also urged shareholders to vote in favor of a proposal to name an independent chairman when JPMorgan convenes its annual meeting May 21. Jamie Dimon is the chairman and chief executive.
A $6.2 billion trading loss last spring at JPMorgan, and its recent run-ins with regulators over its risk controls and capital plan, have stirred a debate about corporate governance at the biggest U.S. bank.
CtW rejects the conclusion of a review by JPMorgan Chase’s board that the risk policy committee had conducted sufficient oversight of the chief investment office. It also says that James Crown, Ellen Futter and David Cote, who serve on the risk panel, and Laban Jackson, who chairs the audit committee, should be voted off the board because they lack expertise in banking, trading, regulation and accounting.
“Upgrading director independence and financial expertise is critical if this board is to ask the tough questions of management and the bank’s risk-taking on good or bad days,” Dieter Waizenegger, CtW’s executive director, said in an email Saturday.
JPMorgan Chase spokeswoman Kristin Lemkau said in email that that the company "strongly endorses" its current directors for reelection and disagrees with CtW's and ISS' positions.
Though the company "has acknowledged a number of mistakes relating to its losses in [its chief investment office], an independent review committee of the board determined that those mistakes were not attributable to the risk committee,” Lemkau added.
The fight has been building for months.
Last year CtW voted against the four directors.
ISS, which advises investors on proxy voting, also called last year for an independent chairman. A spokeswoman for ISS did not respond immediately to a request for comment. JPMorgan Chase's board has urged shareholders to keep its current structure.
Crown, the president of investment firm Henry Crown and Co., has served as a director since 1991. Futter, who heads the American Museum of Natural History, has served as a director of JPMorgan Chase since 1997. Cote, the chairman and chief executive of Honeywell International, has been a director since 2007. Jackson, who serves as chairman and chief executive of Clear Creek Properties, has served as a director of JPMorgan Chase since 1993.
CtW raised concerns in a letter in March to JPMorgan Chase's board.
A finding by the board in its review that the risk policy committee had received “non-contextualized data” about the chief investment office “rather than having information distilled in a format meaningful and useful to the directors,” undermines the conclusion that the committee had upheld its responsibility to shareholders, the letter said.
CtW also said that an order in January from regulators that the company take steps to strengthen anti-money-laundering controls, a directive in March by the Federal Reserve that the bank revise its capital plans and reports in March that the Office of the Comptroller of the Currency had lowered its assessment of management, all demonstrate that shortcomings in oversight by the board remain.
