Wednesday, May 20, 2015

J.P. Morgan Holders Back Compensation Plans
Detroit demonstration against Chase
Bank shareholder's meeting.
Preliminary vote gains 61.4% approval, lowest since 2011

Wall Street Journal

J.P. Morgan Chase & Co. shareholders voted in favor of the company’s compensation plans at the bank’s annual shareholder meeting, though the tally was the lowest since 2011.

The preliminary vote garnered 61.4% of shareholders, the lowest since the Dodd-Frank financial-overhaul law in 2011 required public companies to let shareholders vote on approving top executives’ pay packages. Last year 77.9% of shareholders voted in favor. Shareholders also endorsed James Dimon’s twin role as chairman and chief executive with 35.9% of the initial vote for splitting the roles, compared with 32.3% in 2013, when it was last voted on.

J.P. Morgan’s annual meeting was held in Detroit, coming about a year after the largest U.S. bank by assets announced its commitment to the city’s economic recovery.

Proxy-advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. recommended J.P. Morgan shareholders vote against the company on matters including Mr. Dimon’s pay package, according to their 2015 reports on the bank. Instead, ISS and Glass Lewis, whose recommendations are relied upon or taken into account by some large fund shareholders, said the bank didn’t outline the performance criteria for its pay packages clearly enough, among other issues.

J.P. Morgan Lead Director Lee Raymond said some shareholders have questioned the bank’s incentive compensation structure and that the board is taking it into account.

The shareholders “generally did not question the actual level of compensation,” he said, adding that the board has previously considered alternative structures for a portion of the incentive compensation.

Mr. Dimon received $20 million in compensation for 2014, including a base salary of $1.5 million and an $18.5 million bonus, with $11.1 million in restricted stock and $7.4 million in cash, his first cash bonus since 2011, according to the proxy statement. That was flat from his pay for 2013 and up from $11.5 million for 2012—a figure depressed in large part by the “London Whale” trading loss early that year, according to the proxy statement.

The proxy-advisory firms also recommended voting for an independent chairman of J.P. Morgan—something they both last suggested in 2013.

All directors received at least 95% of the vote, according to initial counts by the company, compared with 96% last year. In 2013, three directors received less than 60% of the vote, two of whom later resigned.

Shareholders also approved PricewaterhouseCoopers LLP as the bank’s auditor.

None of the six shareholder proposals gained enough traction for approval. A proposal asking for more disclosure of the bank’s clawback policy garnered the most votes in favor, with 43.8%, according to the bank’s initial counts.

About two dozen protesters marched outside the bank’s annual meeting at Detroit’s downtown Westin Book Cadillac hotel. Some protesters said more attention by the bank was still needed even after it has recently paid fines for its role in the housing lending crisis.

“My neighborhood has been destroyed by the mortgage foreclosure crisis,” said Mike Shane, a 62-year-old auto engineer who lives on Detroit’s west side. The bank’s community development efforts—committing $100 million over the next five years—are targeted to help downtown developers and not many residents in outer neighborhoods still suffering from high unemployment and rundown properties, he said.

“You caused this problem,” Mr. Shane said of J.P. Morgan’s role in the housing meltdown. “Now you need to fix it.”

J.P. Morgan has so far deployed more than $34 million to address community development, homeownership, workforce training, small business expansion and economic growth.

Civil rights leader and activist Rev. Jesse Jackson, who spoke during the comments section of the bank’s meeting, said J.P. Morgan’s Detroit investment is a “step in the right direction…we don’t need another Baltimore.” He urged Mr. Dimon to create a prototype plan for urban reconstruction.

Write to Emily Glazer at and Matthew Dolan at

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