A coalition of investors that controls over 16 million shares, worth $829 million, is calling on JPMorgan Chase to name an independent board chair.
The decision of investors, including the AFSCME Employees Pension Plan, the Connecticut Retirement Plans and Trust Funds, Hermes Equity Ownership Services and the NYC Pension Funds, to jointly file the proposal in 2013 reflects mounting investor concerns with the board’s oversight in the wake of the London Whale losses, recent regulatory sanctions, and its failure to fully demonstrate that it can manage the size and complexity of its balance sheet.
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JP Morgan Chase shareowners will vote on the proposal at the company’s 2013 annual meeting in May.
“Unchecked risk-taking and oversight failures have cost JPMorgan more than $6 billion in losses and seriously damaged its reputation,” says NYC Comptroller John C. Liu, who is investment advisor, custodian, and trustee of the New York City Pension Funds. “Without an independent board chair, JPMorgan will be unable to restore investor confidence and ensure future compliance — both integral to protecting and creating long-term value.”
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A clear conflict of interest exists when a company’s board of directors, which is responsible for overseeing the company’s CEO, is chaired by the CEO.
This conflict is heightened by the fact that the CEO provides the board with the information it depends on to oversee business practices and assess risk management.
The coalition believes that the perpetuation of this conflict of interest in the management of the largest U.S. bank has the potential to adversely affect the value of their investments in the bank and should be eliminated.