JPMorgan ChaseShares of JPMorgan Chase have returned 13% this year, following a 36% return during 2012. The shares trade for 8.3 times the consensus 2014 EPS estimate of $5.94, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $5.67. The forward price-to-earnings ratio is quite low for a bank stock in the current environment. JPMorgan on Monday was include among TheStreet's 10 Cheapest Bank Stocks to Forward Earnings. Despite a strong earnings track record over the past several years, including record last year, despite losses of at least $6.2 billion from the "London Whale" hedge trading activities of its Chief Investment Office (CIO), JPMorgan's shareholders will vote at the company's annual meeting on May 21 to decide whether or not to separate James Dimon's combined roles as CEO and chairman of the bank's board of directors. ISS Proxy Advisory Services last Wednesday said it was "supporting the shareholder proposal requesting an independent chair given the governance failure in connection with the CIO incident, the size and complexity of JPM's business, and the continued challenges faced by the company."
Then on Tuesday, rival proxy advisory firm Glass, Lewis & Co. also said it was in favor of a vote to split Dimon's two roles, while also advising shareholders to vote against three members of JPMorgan Chase's audit committee. It has been widely reported that bank regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, have expressed distrust in JPMorgan's Management Team. Following the completion of annual bank stress tests in March, the Fed required JPMorgan to submit a revised capital plan by the end of the third quarter.
If shareholders vote to strip Dimon of his title as chairman of JPMorgan's board of directors, there is no way of knowing how the CEO will react, however Rafferty Capital analyst Richard Bove on Monday argued that shareholders should think twice. In a note to clients, Bove wrote that "Jamie Dimon joined the executive team of JPMorgan Chase in 2005. In that year, JPMorgan earned $8.5 billion. In 2012, the company earned $21.7 billion. The pretax, pre-provision
-- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn