News Analysis

Shareholders vote against Jamie Dimon’s $200m pay plan

by Stephen Conmy on May 18, 2022

Shareholders have voted against JPMorgan Chase’s executive pay plans, sending a strong message to the bank’s chief executive, Jamie Dimon, and the management team.

What happened?

At the bank’s annual meeting in May 2022, only 31 per cent of investors voted in favour of pay increases for the CEO Jamie Dimon and his executive team. The ‘say on pay’ is the first time the bank’s board has lost such a vote since it was introduced in 2009. The board proposed a $201.8mn package for six top executives, including Dimon.

Dimon is both CEO and the chair of the board.

Why is this interesting from a governance perspective?

There are a couple of things that make this interesting from a governance perspective.

First, the vote is non-binding, which means Dimon and his board can ignore it. However, this could lead to further activism on the part of investors.

Second, the influential proxy adviser Glass Lewis advised investors to vote against the bank’s compensation package.

What is a proxy advisor?

Proxy advisor firms, like Glass Lewis, provide institutional investors with research and data and advice on management and shareholder proxy proposals for voting at annual and special meetings.

Proxy advisors are independent research firms that evaluate extensive and complex filings about mergers and acquisitions, CEO salaries, and other typical corporate endeavours.

Proxy advisors help key shareholders protect their interests by bringing expert knowledge to bear on these issues.

Jamie Dimon is in a tricky situation

As CEO and chair of the board, Dimon finds himself in a difficult situation. He said the board appreciates the feedback received from shareholders regarding compensation.

“The board takes it very seriously, and we will continue to actively engage with them,” he stated.

If he ignores investors’ concerns, it could increase the level of shareholder activism, which is not what the board would want.

Glass Lewis warned investors

Glass Lewis warned investors against voting for the bank’s compensation package, criticising a $28m time-based grant given to COO Daniel Pinto.

“Excessive one-off grants to the CEO and COO amid tepid relative performance worsen longstanding concerns regarding the company’s executive pay programme,” Glass Lewis wrote to shareholders.

Although JPMorgan reported record profits in 2021, it has warned that rising costs, including $15bn for new initiatives, will hurt profits in 2022.

According to the Financial Times, investors told Dimon and his leadership team they were not providing enough detail about the spending plans.

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