BlackRock Inc

NYSE:BLKUnited States

By Rebecca Ungarino "Watch what you wish for," equity analysts at Bank of America told investors this week. While a large and growing number of JPMorgan Chase stockholders voted to support a shareholder-led proposal to strip CEO Jamie Dimon of his role as chairman this week, a BofA Securities team led by Ebrahim Poonawala argues that makes no sense. With 42.7% of votes in favor, the proposal, brought by prolific resolution filer Kenneth Steiner, failed at the bank's annual shareholder meeting on Tuesday. Still, that is notably high. The influential proxy advisory firm's Institutional Shareholder Services and Glass Lewis backed the idea, and support rose from some 37% in favor of a similar proposal filed last year. Investors have raised the issue at JPMorgan and some other banks for years. A JPMorgan spokesperson declined to comment for this article. It is "unclear to us why so many shareholders believe that splitting these roles would be value enhancing," wrote Poonawala, who covers financial firms and rates JPMorgan shares positively. He cited the bank outperforming both the S&P 500 and the widely tracked Financial Select Sector SPDR exchange-traded fund over the past five, 10, and 15 years. Dimon has been CEO since 2006 and became chairman a year later. "As long as Jamie Dimon is running the bank, we do not see a reason for shareholders to want a separation in the roles," the analyst said. Instead, investors should consider the risks of an eventual transition to a new CEO, he wrote. Poonawala's team also noted that JPMorgan has an independent lead director on the board. The analysts said that while "we support corporate accountability," particularly when it comes to governance, banks that failed or came near the brink last year -- Credit Suisse, Silicon Valley Bank, and Signature Bank -- also had different people in the chair and CEO seats. JPMorgan noted in its proxy statement as part of its opposition to Steiner's resolution that the board said in 2022 that it plans to split the roles once the firm names a new CEO. The bank argued that the proposal was at odds with shareholders' interests because it could limit how the board chooses to change its leadership structure. There are good reasons, though, for company boards to install distinct chairs and CEOs. People serving in both roles oversee themselves, introducing obvious questions of accountability and checks on power around decision-making. Independent directors, too, are not replacements for independent chairs. Some analysts question how effective longtime independent lead directors can be in their roles. Stephen Burke, the former NBCUniversal chairman and CEO who is now JPMorgan's lead independent director, has been on the bank's board for 20 years. Steiner said that as "director tenure goes up director independence goes down." JPMorgan rejected that in its proxy statement, saying the board has found that Burke is independent. The lead independent director is empowered "to include robust responsibilities and independent authority to provide a strong, effective counterbalance to the Chair," it said. ISS, the proxy-advisory firm, said in support of Steiner's proposal that while many companies do well with a single person in both roles, many shareholders believe that it is better to separate the positions. Similar proposals at other U.S. financial firms have failed this year while gathering more support from the year prior. At Goldman Sachs, 33% of shareholders backed the resolution, up from 16% in 2023. At Bank of America, 31% supported it, up from 26% last year. Glass Lewis and ISS had recommended that shareholders back the measures at both banks. BlackRock investors also voted down a shareholder proposal to split the firm's CEO and chair roles. It is unclear when Dimon, 68, will retire, but he provided clues during the bank's investors' day, held on Monday in New York. He suggested that plans for his retirement were further along than in the past. But the bank's plan to separate the CEO and chair roles at the time of the next CEO transition has signaled to investors that he may stay in the latter position. "Will I stay as chairman for a while?" he said on Monday. "We'll see." Write to Rebecca Ungarino at rebecca.ungarino@barrons.com This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires May 24, 2024 15:41 ET (19:41 GMT)

By Elizabeth O'Brien

When it comes to retirement, many Americans are on their own. They've saved diligently for years and have to figure out how much they can spend each month to make their money last as long as they expect to live.