That didn't work out very well for Enron or its shareholders.

Tom Brown, a bank analyst who manages Second Curve Capital, made an interesting point in a piece on on May 10, suggesting that institutional investment managers should make their own assessments of firms' annual proxies, rather than paying outside services to recommend how they should vote:

"By the nature of their jobs, investment managers are supposed to be independent thinkers," Brown wrote. "I can't imagine an area of the business where independent thinking is more vital than how a manager carries out his role as a fiduciary. It is the sort of thing that simply shouldn't be outsourced by any manager who takes his job seriously. But too many managers unfortunately do outsource it, to these self-appointed, highly paid governance 'experts' with their idiotic 'best-practices' checklists that have little to do with the real world, and their dumb recommendations that can often weaken a company rather than strengthen it."


Another reason that JPMorgan's shareholders big and small should think twice before jumping on the "punish Dimon" bandwagon is that he's already been punished. His pay was cut in half last year as a result of the London Whale losses, even though the losses didn't keep the company from earning a record $21.3 billion, or $5.20 a share.

It's also interesting to look at JPMorgan's stock performance under Dimon, as it compares to its peers among the largest U.S. banks. Dimon took over as JPMorgan Chase CEO in January 2006. From the end of 2005 through Monday's market close at $52.29, JPMorgan's shares returned 58%. Here's how stocks of the remaining "big six" U.S. banks fared over the same period, ranked from the worst return to the best:
  • Shares of Citigroup (C) closed at $51.60 Monday, for a negative return of 88% since the end of 2005.
  • Bank of America (BAC) closed at $13.51, for a negative return of 65% since the end of 2005.
  • Morgan Stanley (MS) closed at $25.07, for a negative total return of 40% since the end of 2005.
  • Goldman Sachs (GS) closed at $158.90, for a positive total return of 34% since the end of 2005.
  • Wells Fargo (WFC) closed at $40.20, for a positive return of 56% since the end of 2005.

So JPMorgan's stock was the best performer, since the end of 2005 through Monday's close. That looks like a fine reason to reward James Dimon, by getting off his back.

Meanwhile, JPMorgan's stock looks like a bargain right now, with the shares trading at a discounted forward price-to-earnings ratio, when compared to the rest of the "big six" club. Here's the entire big six group, ranked from lowest forward P/E to highest, as of Friday's close:
  • JPMorgan's shares at Monday's close traded for 8.8 times the consensus 2014 earnings estimate of $5.94 a share, among analysts polled by Thomson Reuters.
  • Citigroup's shares traded for 9.7 times the consensus 2014 EPS estimate of $5.32.
  • Morgan Stanley traded for 9.9 times the consensus 2014 EPS estimate of $2.54.
  • Goldman Sachs was trading for 10.4 times the consensus 2014 EPS estimate of $15.27.
  • Bank of America traded for 10.5 times the consensus 2014 EPS estimate of $1.29.
  • Wells Fargo traded for 10.6 times the consensus 2014 EPS estimate of $3.81.

JPMorgan's shareholders should vote to allow Dimon to continue running the company. The bank has moved on from the London Whale mess and seems quite unlikely to repeat that mistake. Regulators will continue to scrutinize the company, arguably helping to make it stronger than ever. Some politicians will continue to grab television face time by bashing the biggest U.S. banks, which is to be expected.

Meanwhile, investors confident in the continued U.S. economic recovery are looking at a bank stock bargain, in JPMorgan Chase's shares.

JPM Chart JPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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