NEW YORK (TheStreet) -- Jamie Dimon's disclosure late on Tuesday that he has a curable form of throat cancer should cause JPMorgan (JPM) to split its chairman and CEO roles in the coming year, according to Rafferty Capital Markets banking analyst Richard X. Bove.
Dimon has won strong support for his dual chairman and CEO roles from JPMorgan's board of directors and shareholders and a vote on a possible split of those roles didn't even come up at the bank's annual meeting earlier in 2014. Dimon's health issues, however, may force the hand of JPMorgan's board of directors, according to Bove.
JPMorgan shares were falling less than 1% in early Wednesday trading, though shares have gained 28% year to date.
"For the Board to put the company in a position where there isn't a defined leader or replacement if Jamie Dimon were unable to function would be unacceptable," Bove said on the phone, of JPMorgan's chairman role given Dimon's apparent health issues.
Were JPMorgan to split its chairman and CEO roles, Bove said the bank would likely pick among its current set of independent directors. He also noted that a member of the board's audit committee might be best equipped to assume the chairman role.
Currently, Laban P. Jackson Jr. chairs JPMorgan's audit committee, while James A. Bell and Crandall Bowles are also members. Jackson, a long-serving director at Bank One, was brought to JPMorgan's board alongside Jamie Dimon during a $58 billion merger of the two firms in 2004.
JPMorgan expects Dimon, in concert with the heads of the bank's various business units, will be able to lead the firm as he undergoes approximately eight weeks of treatment.
Spokesperson Joseph Evangelisti said that Dimon was in JPMorgan's offices Wednesday and said the bank's board has succession plans for Dimon over different time horizons. "The board already has a short-term, a medium-term and a long-term succession plan," Evangelisti said by telephone.
When asked whether JPMorgan's board would now look to split Dimon's chairman and CEO roles, Evangelisti said the bank was never against splitting those roles, just that it believed such a decision should be made by its board of directors and not shareholders.
JPMorgan's board of directors currently supports Dimon's chairman and CEO roles, Evangelisti said.
The Chairman and CEO Debate
The split of JPMorgan's CEO and chairman role has come up at recent annual shareholder meetings, as some vocal investors challenged JPMorgan to change the way it operates given the firm's struggles to recover from an over $6 billion trading loss and the fallout of litigation from the collapse of the housing market.
While proxy advisory firms such as Institutional Shareholder Services supported shareholder motions to split JPMorgan's chairman and CEO roles, ultimately, stockholders voted overwhelmingly to keep Dimon's dual roles intact.
In 2014, JPMorgan reached a settlement with an investor group including Sisters of Charity of Saint Elizabeth to remove a motion to split Dimon's roles from the company's annual proxy. That settlement stipulated JPMorgan improve risk controls and came just a few months after the bank took on former ExxonMobil (XOM) CEO Lee Raymond as lead independent director in September.
Raymond was given the power to set the agenda of board meetings, and time meetings whenever he chose so. At the time of Raymond's introduction as lead director, JPMorgan also said that its board of directors would have the power to hold executive sessions without management at those meetings.
Jamie Dimon's Curable Cancer
On Tuesday evening, Jamie Dimon said in a letter to employees he had been diagnosed with a curable form of throat cancer, having identified the disease at its early stages. Dimon's cancer is confined to the original site and adjacent lymph nodes on the right side of his neck, according to a letter to employees. Doctors have found no evidence of cancer elsewhere in Dimon's body, the letter went on to state.
Although Dimon will require approximately eight weeks of treatment, which he will undergo at Memorial Sloan Kettering Hospital in New York City, JPMorgan's board of directors has allowed him to continue running the bank, which is the largest in the U.S. by assets and revenue.
"While the treatment will curtail my travel during this period, I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal. Our Board has been fully briefed and is totally supportive," Dimon said, while noting that the bank has leadership across its business lines and functions.