NEW YORK (TheStreet) -- New York City has won the support of two advisory firms in its push to have JPMorgan Chase (JPM) tell investors when executives are forced to return bonus pay because they broke the law.

Both Institutional Shareholder Service and Glass Lewis say investors should vote in favor of the New York City Pension Funds' proposal for the company to disclose its use of so-called clawback provisions at least once a year. Investors should also support splitting the roles of chairman and CEO while voting against the $20 million pay package for CEO Jamie Dimon, the advisory firms said.

Glass Lewis and ISS did not complain about the bank's 2014 performance but said investors should urge JPMorgan to provide greater clarity about executive pay during its May 19 annual meeting in Detroit.

"Without transparency, it is impossible to know if a clawback policy is being used or if it is being used effectively," New York City Comptroller Scott M. Stringer said on Friday.

While JPMorgan has "established clawback policies that go well beyond what which is required by law," the policies are only effective when used, Glass Lewis said in its report. "Given the number and size of settlements the company has entered into, we believe that increased disclosure of how the company is enforcing its recoupment policies would benefit shareholders."

For example, JPMorgan paid about $1 billion in November in a settlement with three U.S. and British regulators over claims it conspired to rig foreign exchange benchmarks, Glass Lewis said. In February 2014, JPMorgan paid $614 million in a U.S. Justice Department settlement of allegations that it had submitted false claims on federally guaranteed mortgage loans, the firm said.

The bank argued in its proxy filing that, while it has reported previous clawbacks, the proposed requirement could confuse shareholders. If the bank had to make a report even in years when no incentive pay had been forfeited, shareholders might conclude that the bank didn't do anything at all to address misconduct in that period. 

In addition to clawbacks, there are a number of measures JPMorgan can take to correct misconduct, including retraining, suspension and termination, the bank noted.

While Glass Lewis praised the bank's clawback policy on pay for senior executives, along with its balance between short- and long-term incentive pay, its report said pay and performance aren't sufficiently linked and variable pay is largely discretionary.

And when it comes to Dimon's pay, the firms don't have a particular problem with his bonus package of $18.5 million, but much like an elementary school math teacher, they want the board to show how it arrived at that figure.

"By relying on a largely discretionary approach to compensation, shareholders are unable to fully see a direct link between pay and performance," Glass Lewis said. "We believe shareholders generally benefit when compensation levels are based on metrics with pre-established goals."

On a nominal basis, Dimon's proposed pay for 2014 appears to be unchanged from 2013. His salary was $1.5 million in both. But instead of paying the remaining $18.5 million in restricted stock as in 2013, the board suggested that $7.4 million be paid in cash and $11.1 million in restricted stock.

A cash bonus of that size would be the largest Dimon has received since 2007, and ISS says the bank has not provided sufficient justification for the change. While restricted stock is subject to vesting schedules and clawback provisions, the cash award lacks the same provisions.The justifications for pay changes should be consistent and clear, the firms said.

According to Glass Lewis, Dimon's 2013 pay was justified based on the bank's 37% total shareholder return. For 2014, the bank highlighted its operating financial performance as a key driver for Dimon's proposed compensation package.

While JPMorgan has considered a more formula-based approach to pay, its primary argument against doing so is that the diversity of the firm's operations makes it difficult to set a single way to measure performance.

In 2012, for example, even though net income rose 12%, to $21.4 billion, a record high at the time, Dimon's pay was actually lowered by about half because of losses connected to the "London Whale" trading incident, the bank said in its proxy statement.

Source: JPMorgan Proxy Statement

Shareholders will also have the opportunity to vote on a nonbinding proposal that would require an independent board chairman to increase accountability.

Currently Citigroup (C) is the only one of the major U.S. banks to divide the chairman and CEO posts. Bank of America (BAC), which split the two roles in 2009 after the controversial purchase of investment bank Merrill Lynch during the height of the financial crisis, recombined them last fall. Its shareholders will get a chance to ratify the change no later than next year.

In JPMorgan's case, NYC PensionFunds and California State Teachers' Retirement System (CalSTRS), two organizations that were very vocal about the chairman and CEO roles being split in the past, declined to comment on this year's vote.

CalSTRS does, however, maintain in its corporate governance principles that the roles should be separate. 

"The board should be chaired by an independent director," the pension fund said in a report outlining those principles. "The independent chair should be someone who has not had a substantive employment relationship with the company in the past five years."

The California Public Employees Retirement System, which holds about $800 million in JPMorgan shares, reiterated its support for splitting the chairman and CEO roles in most cases.

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