Union Pension Funds Want To Strip Him Of Chairman Title
Steve Dibert, MFI-Miami
AFSCME and other labor unions who’s pension funds hold shares in JPMorgan Chase have decided to change their strategy in their fight with big banks namely JPMorgan Chase. Instead of recruiting college students to help them experiment with the limits of personal hygiene by camping out in a plaza for months on end without bathing, they have now decided to take their fight to JPMorgan Chase’s shareholder meeting.
AFSCME and the other unions who own stock in JPMorgan Chase are now demanding that Chairman and CEO Jamie Dimon be stripped of his title as Chairman be replaced by an independent Chairman. They claim that there is a direct conflict of interest when a Board of Directors is overseen by the CEO.
This effort is by the unions is part of a larger endeavor by unions and other activist shareholders calling on reforms in corporate governance by splitting the role of CEO and chairman. The AFSCME Employees Pension Plan has submitted a non-binding shareholder proposal for investors at JPM Chase’s 2013 annual meeting.
The pension fund faces a couple major hurdles in making their proposal a reality. First, they only hold .04% of the stock which means they would have persuade a lot of other institutional investors to go along with it and since the proposal is nonbinding, even if AFSCME can get a majority of share holders to go along with it, the board is under no obligation to make the change.
Nevertheless, as Ron Orol from Market Watch points out, “a large cross section of investor support could be embarrassing for J.P. Morgan. In 2009, for example, a “just vote no campaign” engineered at Bank of America Corp. by labor-backed Change to Win Investment Group to remove then-Chief Executive Ken Lewis and two other directors from the board failed to garner a majority vote opposing any of the three candidates. However, the effort helped hasten Lewis’ departure at the end of 2009.”
Although Dimon is vulnerable because of his missteps especially with the London Whale fiasco, he is a very valuable asset to investors and they have lined up behind the stock and him despite the problems due to JPMorgan showing record profits.