On May 15, JPMorgan Chase & Co. Chairman and CEO Jamie Dimon was face-to-face with the bank’s shareholders at its annual shareholder meeting.
At the meeting, Dimon retained his position as both the firm’s chairman and chief executive—a role that some large shareholders had wanted to split up for the checking and balancing of power. At the end of the meeting, Dimon shared that “we will do the right thing,” and that may “include claw backs,” presumably from the traders who caused the losses.
Dimon would have already had to face a challenging shareholders meeting, as JPMorgan’s stock had declined by more than 10 percent in the week leading up to the meeting, and Dimon’s pay package of $23 million is among the highest on the Street.
Shareholder meetings have become a forum for dissent and reform at many large banks. Recently, the shareholders of Citigroup Inc. rejected a proposed pay increase for CEO Vikram Pandit. The vote is part of the recent Dodd-Frank financial reform legislation, authorizing shareholders to have a “say on pay,” although the vote is nonbinding and the board ultimately determines executive pay.
But the stakes were raised as the meeting came a mere few days after May 10’s stunning disclosure of a massive $2.3 billion loss—which could increase to $4 billion by the end of the year—due to a trading position accumulated by the company’s chief investment office. The loss led to departure of the head of the department, along with two other executives.
“This should never have happened. I can’t justify it. Unfortunately these mistakes were self-inflicted,” Dimon said, apologizing to shareholders at the meeting.
The CEO reiterated that the bank would not reduce its dividend payout in light of the recent loss, and that JPMorgan has enough capital to withstand the financial hit.
Asked by one shareholder whether he is still opposed to the Volcker Rule given recent events at the bank, Dimon said that he supports “good, strong, simple regulation.” Leaders of other banks, who have argued that regulations are becoming more complex and divergent across jurisdictions, have echoed those sentiments.
At the end of the meeting, JPMorgan said that shareholders rejected a proposal to split the roles of executive chairman and chief executive officer. The decision is seen as a coup for incumbent Jamie Dimon, as he is set to hold onto both positions. Around 40.1 percent of shareholders voted yes for the split, the company disclosed.
Also on May 15, the FBI reportedly opened a preliminary investigation into the $2 billion trading loss. The FBI joins the Securities & Exchange Commission, the Federal Reserve, and the U.K. Financial Services Authority among the regulators looking into the situation.
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