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May 17, 2012
JP Morgan Chase Holds Annual Meeting Days After $2 Billion Loss
    by Robert Kropp

A resolution calling for improved corporate governance through separating the roles of Chair and CEO gains 40% of shareowner support.

The annual general meeting of JP Morgan Chase occurred on Tuesday in Tampa, days after the bank's disclosure that its London-based investment office had lost $2 billion in risky proprietary trading. It has been estimated that the losses could eventually total as much as $4 billion.

At the annual meeting, JP Morgan's shareowners voted on a resolution submitted by the American Federation of State, County & Municipal Employees (AFSCME), calling for the appointment of an independent director as Chair of the Board.

"JPMorgan's CEO James Dimon also serves as chairman of the Company's board of directors," the resolution states. "We believe the combination of these two roles in a single person weakens a corporation's governance which can harm shareholder value."

The resolution was introduced at the meeting by Lisa Lindsley, director of capital strategies at AFSCME, who said, "Mr. Dimon is effectively in charge of monitoring his own performance. The stakes are too high to continue where an all-powerful CEO is his own boss. Looking for an infallible CEO is a fool's errand... Independent board leadership would be in the best interest of the shareholders."

The resolution gained an impressive 40% of shareowner support.

A second resolution, filed by Investors Against Genocide (IAG), called on JP Morgan's board to "institute transparent procedures to avoid holding investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights."

Support for the genocide-free investing proposal increased this year to 9.2%, compared to 7.7% last year, when it was filed for the first time. Despite the shareowner vote in favor of the proposal last year—and despite the fact that it is a signatory to the United Nations' Principles for Responsible Investment (PRI)—JPMorgan Chase actually increased its holding in PetroChina in 2011. It now owns $1.5 billion worth of PetroChina, and is one of the company's largest investors.

The issue of mortgage loan modifications and foreclosures were also very much on the minds of sustainable investors at the meeting, as well as hundreds of protestors gathered outside. Rev. Seamus Finn of the Interfaith Center on Corporate Responsibility (ICCR) said to Dimon at the meeting, "You acknowledged JPMC’s mismanagement in the servicing of loans including robo signings and other sloppy practices that have wreaked havoc with the lives of millions of Americans. You seemed to acknowledge the voices of the individual homeowners impacted by these mistakes."

"We heard you recognize that management oversight of processes large and small was essential to the firm's credibility and profitability and your implicit commitment to ensure that proper oversight was in place," Finn continued. "We heard your words echoed again in the voices of the former-homeowners of today and the demonstrators outside at this moment, all demanding to know what is our company doing every day to earn this privilege, this public, social license?"

"We are all weary of mistakes and as shareholders we will continue to hold you to a very high standard," Finn concluded. "But we can't help wondering, Mr. Dimon, do you truly hear the voices of the people outside? Do you hear us, your investors?"


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