JP Morgan's Jamie Dimon in shareholder revolt over role
JP Morgan chairman and chief executive Jamie Dimon is facing a shareholder revolt as investors prepare to vote on whether he should be allowed to keep both jobs.
A group of shareholders has demanded an independent chairman to help protect the bank from future trading fiascos.
The fallout from the so-called London Whale trades, which cost the US bank $6.2bn (£4bn), has sparked the furore.
Support for the proposal is running at just over 40%, according to Dow Jones.
Although the result of the vote is non-binding, meaning Mr Dimon could continue as before, reports have suggested that he may resign if the votes are not in his favour.
Both Glass Lewis and Institutional Shareholder Services, influential firms that give advice to large shareholders, are recommending that the jobs be split.
"An independent chairman is better able to oversee the executives of a company and set a pro-shareholder agenda," Glass Lewis argues in its proxy report.
Last year's annual meeting, which came just after the London Whale losses were first revealed, saw 40% of shareholders vote for a similar proposal. On previous occasions in 2007 and 2008 when shareholders were asked about separating the roles, just 15% voted in favour.
"Even a Master of the Universe can be swallowed by a London whale," said Lee Saunders, president of public employees' union AFSCME, which is also voting for the roles to be split.
In April last year, JP Morgan reported a loss in a London-based division responsible for using trades to hedge the bank's overall risk in markets.
At the time, Mr Dimon dismissed the incident as a "tempest in a teapot". But just a month later, he admitted the bank had lost about $2bn on the erroneous trades and was forced to acknowledge that the bank had shown "bad judgement".
Bruno Iksil, the trader at the heart of the incident, was dubbed the London Whale because the huge positions he had taken on JP Morgan's behalf were big enough to move markets.
Despite the incident, the bank insists that the joint role is the "most effective leadership model." Last week, it sent a letter to shareholders, urging them to reject the proposal to split the top two roles.
"We believe that a vote against our current directors or a vote to permanently separate the chairman and chief executive officer positions could be disruptive to the company and is not in shareholders' best interests," it wrote.
The vote comes just after JP Morgan reported record first-quarter profits of $6.5bn (£4.2bn) for the first three months of the year. Retail banking deposits rose 10%, new mortgage orders rose 37% and the company said it had kept the top spot for earnings from investment banking.
Mr Dimon has said the results indicate that no changes are necessary to either the bank's board or its financial structure.
"The board should be applauded," Mr Dimon is reported to have said at a conference last week in Boston.