Updated from 12:04 p.m. ET with more information throughout.
Preliminary voting results collected prior to the meeting were announced at the close of the annual meeting. The initial tallies showed 32.2% of the shareholders voted in favor of a proposal to split the chairman and CEO roles.
That is down from 40% the proposal received last year and while the final count is not yet in, it suggests that the bank's campaign in recent weeks to quash the proposal was enormously successful.Shares of JPMorgan were rising 2% Tuesday afternoon at $53.37. Shareholders also voted to re-elect all the board members including the three members of the risk committee -- Honeywell (HON) CEO David Cote, James Crown, president of private investment company Henry Crown and Company and Ellen Futter, president of the American Museum of National History. Cote received 59.3% of the shareholder votes, James Crown received 57.4% of the votes and Ellen Futter received 53.1% of the votes. Futter was not present at the meeting Tuesday. About 84% of the shareholders had cast their votes before the meeting began. Shareholder activists including influential proxy advisory firms Institutional Shareholder Services and Glass Lewis, had urged the bank to consider appointing an independent chairman at the bank, arguing that there was an inherent conflict of interest when a CEO is also chairman of the board. The CEO cannot be his own boss, they argued. The shareholder vote has been the subject of debate for the last several weeks, with many Dimon supporters labeling the vote as a personal attack on the outspoken CEO. Several Wall Street CEOs have voiced their unwavering support of Dimon, including billionaire investor Warren Buffett. Press reports suggested that Dimon would quit if the vote went against him keeping his dual role. Analysts warned that the stock would suffer if Dimon were to leave. CLSA analyst Mike Mayo expected the stock to fall as much as 10%.
JPMorgan's board have been campaigning for Dimon for weeks, with presiding director Lee Raymond and fellow board member William Weldon issuing a seven-page letter to shareholders urging them to vote against the proposal to split the chairman and CEO roles. The directors also extended their support to each of the three directors on the risk committee whose re-election is being contested. Speaking in support of the shareholder proposal to split the roles, AFSCME representative Lisa Lindsley said the vote was not intended to be a referendum on Dimon's performance. "Good corporate governance is not a personality contest," she said. The chairman and CEO were different jobs and that the CEO could not be his own boss. She also noted that the board had failed at succession planning. "No one person should be indispensable." Another representative said splitting the roles "may not be a silver bullet," to corporate governance issues, "but it is an important first step." While Dimon chaired the session, it wasn't a complete Dimon show. Presiding director Lee Raymond also spoke to shareholders to allay their concerns on corporate governance. Raymond said the board is mindful about shareholder concerns over the board structure and takes them seriously. "Give us some time to digest what this all means," he said, adding that the board will make a "tempered analysis" of the board's structure before making any changes. He defended the role of the risk committee in the "London Whale" losses, arguing that even the traders did not know what was going on, so it was hardly reasonable to expect the risk committee board members to expect them to have caught it. He however told shareholders later to "stay tuned" on changes to the risk committee, without elaborating further. Raymond also stressed that the board operated independently without influence from Dimon. The board met without the CEO and members had the freedom to interact with all of senior management and not just Dimon. He said the independence of the board's oversight was demonstrated following the "London Whale" incident, when it ordered an independent review of the trading losses and slashed Dimon's compensation by half. CLSA analyst Mike Mayo, who owns shares of JPMorgan, was present at the meeting. Mayo is not necessarily a supporter of splitting the chairman and CEO roles but he questioned whether there was "constructive tension" in boardroom discussions. "It's been 50 years since I graduated ... and joined Standard Oil and this is the first time in 50 years that anyone has questioned whether I was strong enough," Raymond told Mayo. He added that all the board members were independent thinkers who could challenge management views. "You don't get to these leadership positions being a wallflower." Mayo also said he doubted there was really anyone in senior management who could step into Dimon's shoes tomorrow. Raymond told Mayo that the board and Dimon were very focused on succession planning. "We intend to have a competent and capable successor to Jamie. But we hope that time is much in the future...I have no illusions that we would be able to clone Jamie," he quipped. By the end of the meeting, the tone became decidedly friendlier. One shareholder applauded Jamie Dimon's performance and urged the board to give him a raise. Dimon gets to remain King. Until next year's meeting. -- Written by Shanthi Bharatwaj New York. >Contact by Email. Follow @shavenk