Investor support for executive pay at JPMorgan Chase cools
Four years after JPMorgan Chase chief Jamie Dimon slammed “lazy” investors for taking their lead from proxy advisers, guidance from a major proxy adviser has once again triggered a significant protest vote against how the bank pays its top executives.
ISS issued a circular last month citing concerns about vague or subjective criteria used to calculate bonuses for JPMorgan’s top five executives who were collectively awarded $110.5m last year, including a $31m package that made Mr Dimon Wall Street’s best paid banking boss.
Just 72 per cent of shareholders endorsed the pay proposals at the bank’s annual meeting in Chicago, down from the 93 per cent who backed JPMorgan’s pay policies a year ago and the worst “say on pay” result the company has faced since 2015 when just 61 per cent of its shareholders voted in favour.
At the time, Mr Dimon took umbrage at the role the two powerful US proxy advisers had played in the vote. “God knows how any of you can place your vote based on ISS or Glass Lewis,” he told an investor conference. “If you do that, you are just irresponsible, I’m sorry. And you probably aren’t a very good investor, either.”
JPMorgan received endorsement for its pay policies from 92 per cent or 93 per cent of its shareholders over the following three years after a revamp that included introducing a new share-based bonus plan for top management with a more formulaic approach, cutting the cash component of Mr Dimon’s own bonus, and introducing a policy of disclosing when a senior executive’s pay had been clawed back.
But this year ISS once again raised concerns, claiming investors “increasingly prefer an incentive programme structure that constrains discretion in favour of emphasis on objective and transparent determinations that are more compatible with pay-for-performance”.
The significant shareholder revolt at JPMorgan this year contrasted with votes at the bank’s peers. Goldman Sachs and Citigroup both got the thumbs up from more than 90 per cent of investors at their latest round of “say on pay” votes, which all banks must hold under the post-financial crisis Dodd-Frank rules.
JPMorgan’s annual meeting this year also revealed a fall in shareholders’ support for the bank’s non-executive directors. This year no director received an endorsement from less than 81 per cent of shareholders — last year no director received less than 88 per cent support.
The lowest approval rate this year was for Stephen Burke. Mr Burke is chief executive of NBCUniversal and is a non-executive director of Warren Buffett’s Berkshire Hathaway. Vanguard, the fund management group, which is JPMorgan’s largest shareholder with an 8 per cent stake, has a policy of voting against any director who is both a named executive officer of another company and sits on two or more public company boards.
Proposals calling on JPMorgan to produce a global figure for its gender pay gap attracted support from 29 per cent of shareholders, while proposals that would have made it easier for new directors to repeatedly run for election received 28 per cent support. JPMorgan had recommended shareholders vote against both proposals.