Thursday, May 28, 2015

What Jamie Dimon Thinks of His Investors

What Jamie Dimon Thinks of His Investors

On more than one occasion in my career I chaired the proxy committee of a money management firm.   In most instances the committee’s work was routine.  We typically re-elected corporate directors.  On a few measures, such as staggered boards and anti-takeover measures, we usually opposed management.  During proxy season in the spring, thousands of matters required us to vote shares on behalf of our investors.  While we conducted extensive research on proposed mergers, spin-offs, and takeovers, we never had the resources to perform due diligence on more mundane matters.  Instead we hired a proxy advisor to lay out the issues and make recommendations. 

Jamie Dimon, Chairman of JP Morgan had some choice words for investors who rely on proxy advisors such as ISS or Glass Lewis:

God knows how any of you can place your vote based on ISS or Glass Lewis. If you do that, you are just irresponsible, I’m sorry. And you probably aren’t a very good investor, either.[1]

Why was Mr. Dimon venting?  ISS and Glass Lewis advised their clients to vote against Mr. Dimon’s compensation package, and a large number of investors followed their advice.  ISS and Glass Lewis had pointed out that Mr. Dimon’s cash incentives weren’t tied to specific performance metrics.  Although I haven’t always agreed with their conclusion, the recommendations of proxy advisors are usually well reasoned and researched.  In this particular instance, the proxy advisors got it right.

As my editor at the News & Observer pointed out, Mr. Dimon doesn’t appreciate it when capitalism threatens his pay package.  Like most imperial CEOs, Mr. Dimon prefers his investors to rubber stamp his proposals and sing his praises.  I guess in Mr. Dimon’s world a good investor is one who always agrees with him.   In my world a good investor would have insisted several years ago that Mr. Dimon seek employment elsewhere.

By the way, Mr. Dimon’s received his pay package, and the board of directors lauded his performance.  I’ll have more to say about Mr. Dimon, JP Morgan, and the bank’s recent felony conviction for currency manipulation in my column on Sunday.


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