(May 1, 2012) — Proxy voting advisors have joined pension funds in calling on banking giant JP Morgan to split its Chief Executive and Chairman role, currently held by Jamie Dimon, over corporate governance concerns.
The proposal, initially filed by the pension plan of the American Federation of State, County and Municipal Employees, has been supported by proxy firms Institutional Shareholder Services (ISS) and Glass Lewis, Dow Jones reported.
The recommendation from ISS to other shareholders cited ‘lagging shareholder returns’ as the reason for the split, saying JP Morgan had underperformed its peers in the Global Industry Classification Standard (GICS) in a one and three year period.
There has been mounting pressure from shareholders in companies based in the United States to split the Chairman and CEO role, which has been a common feature in the country’s corporate landscape.
One of the chief recommendations made to financial firms by the Group of Thirty, an influential network of financiers, last month was to split these roles. The group said combining the role gave one person too much power.
Over the last few months, companies including technology company Research in Motion have relented to investor pressure and split the role.
In 2010, 40% of the S&P 500 had split the role of chairman and chief executive, up from 23% at the beginning of the decade, according to executive recruitment firm Spencer Stuart. Of the 40%, 19% were classified as independent chairman. In fact, an early draft of Dodd-Frank Act mandated the separation of the roles, although this was later dropped.
ISS and Glass Lewis both agreed with JP Morgan on other key shareholder proposals.