JPMorgan Chase's (JPM) efforts to defend Jamie Dimon's dual leadership role got some support last week from SIFMA, a trade group whose former chief executive now works for the bank.
Veteran lobbyist Tim Ryan runs JPMorgan Chase's regulatory affairs, but until January he was CEO of the Securities Industry and Financial Markets Association. Now that trade group has intervened in a contentious shareholder proposal to strip Dimon of his chairman title, in a way that is likely to help JPMorgan Chase.
Last Friday, SIFMA instructed Broadridge Financial Solutions (BR), an investor communications firm that is counting shareholder votes on behalf of JPMorgan Chase, to stop sending real-time results to the American Federal of State County and Municipal Employees, the New York City Comptroller's Office and other sponsors of the proposal to separate the roles of chairman and CEO, the New York Times reported on Thursday.
A JPMorgan Chase spokeswoman declined to comment on what, if any, conversations Ryan or the company has had with SIFMA about the association's discussions with Broadridge. Shareholders will learn the results of the hotly-contested vote this Tuesday in Tampa at JPMorgan Chase's annual meeting.
Ryan's current role is part of his second tour at JPMorgan. Before joining SIFMA in 2008, he was the bank's vice chairman of investment banking. He served as director of the Treasury Department's former Office of Thrift Supervision before joining JPMorgan Chase in 1993, and was a solicitor for the Department of Labor earlier in his career.
SIFMA said in a statement that a working group of its members "had general questions about the process and a vendor's authority to release confidential information, and wanted SIFMA to raise these questions with Broadridge or any proxy firm that would engage in this practice."
Its efforts to stop providing some updates on the voting results shines a light on an obscure corner of the proxy voting process. Public companies have no obligation under the Securities and Exchange Commission's rules to provide running tallies of votes on so-called exempt solicitations, which include proposals that ask shareholders to vote for or against a directive to the company, such as the one that asks JPMorgan Chase to separate the roles of chairman and CEO.
Lyell Dampeer, an executive at Broadridge, says that for several years Broadridge had provided vote tallies to backers of proposals in return for a pledge by the group that received the information to respect its confidentiality. That practice, which Broadridge carried out at the behest of the banks and brokers that hire it, reversed years of the companies' declining to provide the information - a decision that is their prerogative under SEC rules, Dampeer notes.
Last Friday, according to Dampeer, Broadridge received a call from SIFMA, which relayed a directive by its members that Broadridge reverse course and once again refrain from distributing the vote results. "Our contracts generally require us to follow our bank and broker clients' direction," says Dampeer, who adds that Broadridge notified the SEC of the change. "Absent some clarification at some point in the future by the SEC our obligation is to abide by the instruction."
Shareholders say the reversal makes little sense. "We think it's outrageous," says Lisa Lindsley, the AFSCME's director of capital strategies, who adds that her group hired Broadridge to distribute a letter to shareholders of JPMorgan Chase that urged them to vote in favor of splitting the chairman and CEO roles.
Lindsley says her group last received a Broadridge update on the JPMorgan Chase vote results on May 6. "It was never a fluid process," Lindsley says. "We had to beg for it every time."
She argues that the delay in getting the tallies also shows that the proposal's sponsors have not been the ones leaking recent results of the voting to the media.
Broadridge's Dampeer says the fees shareholders pay to distribute a missive covers the cost to the company of the outreach but does not include a right to receive vote totals. "I could understand that the group saying that would have an expectation about getting voting, but we don't have a direct contract with the group," he says. "We're only billing them for the distribution of the material."
Dampeer says that prior to SIFMA's request to stop providing updates, Broadridge had a process in place that aimed to distribute vote tallies rapidly.