Jamie Dimon Goes Way Out of Town for Shareholders’ Meetings: For Good Reason

By Pam Martens and Russ Martens: May 31, 2018 ~

Jamie Dimon, Chairman and CEO of JPMorgan Chase, Explaining Losses to the House Financial Services Committee, June 19, 2012

Jamie Dimon, Chairman and CEO of JPMorgan Chase

JPMorgan Chase likes to hold its annual shareholders’ meetings far away from the media glare of New York City’s pesky press corps. Jamie Dimon, Chairman and CEO of JPMorgan Chase, has good reason to want to dodge Manhattan’s investigative reporters – who might start to see a pattern of fraudulent behavior.

At the 2011 shareholders’ meeting in Columbus, Ohio more than 1,000 protesters descended on the event to protest the bank’s unsavory foreclosure practices. JPMorgan Chase’s 2013 shareholders’ meeting in Tampa – 1100 miles from New York City — came less than two months after the U.S. Senate’s Permanent Subcommittee on Investigations issued a 300-page report on how JPMorgan Chase had used its bank depositors’ money to gamble in risky derivatives in London, eventually losing $6.2 billion of that money. The 2014 shareholders’ meeting, also in Tampa, came four months after the bank pleaded guilty to two felony counts for its role in the Bernie Madoff Ponzi scheme (the bank failed to report to U.S. regulators the highly suspicious activity it knew Madoff was conducting in his business account at the bank). The bank had to pay $2.7 billion of its shareholders’ money to the government in fines and restitution in the Madoff matter.

Dimon was exceptionally lucky in 2015. Just one day after JPMorgan Chase held its shareholders’ meeting in Detroit, the bank was hit with another felony count. This time it was for its role with other global banks in rigging the foreign exchange market.

It is unprecedented for any U.S. bank to receive three felony counts and survive – let alone keep the same Chairman and CEO who presided over those three felony counts. But not only has Jamie Dimon kept his job at JPMorgan Chase, his lavish compensation has made him a billionaire according to Forbes. (JPMorgan Chase awarded Dimon $29.5 million in compensation last year, his biggest haul since 2007 when he was paid $50 million by the bank.) The gravy train extends to the bank’s Board of Directors as well: see JPMorgan Paid a Board Member $532,500 in 2016; Now the Board is Getting a 25 Percent Cash Pay Hike.

What happened at this year’s annual meeting on May 15 in Plano, Texas? According to Kristin Broughton of American Banker it was not a happy affair. Broughton reports:

“Shareholders once again criticized JPMorgan for financing for private prisons, a big focus at last year’s meeting. They also attacked the company’s track record on environmental issues; its investments in companies with ties to government-sponsored genocide in Sudan and Syria; and even its perceived lack of attention to affordable housing issues in Plano.

“At one point, Juleon Robinson, a representative from the nonprofit New Economy Project, accused the company of redlining in its hometown of New York and of failing to do enough for minority communities in neighborhoods such as the South Bronx.”

Reading over the resolutions that shareholders had submitted for action this year, one particular item caught our eye here at Wall Street On Parade. The AFL-CIO Reserve Fund requested that the Board of Directors of JPMorgan Chase prohibit the practice of accelerated vesting of unvested stock awards for senior executives who leave the company to work for the government. The AFL-CIO said “the government” meant “employment with any U.S. federal, state or local government, any supranational or international organization, any self-regulatory organization, or any agency or instrumentality of any such government or organization, or any electoral campaign for public office.”

Correctly calling this a “golden parachute” and “windfall,” the AFL-CIO explained its position as follows:

“At most companies, equity-based awards vest over a period of time to compensate executives for their labor during the commensurate period. If an executive voluntarily resigns before the vesting criteria are satisfied, unvested awards are usually forfeited. While government service is commendable, we question the practice of providing Government Service Golden Parachutes to senior executives…

“…in our view, the vesting of equity awards that would otherwise be forfeited after a voluntary termination is a windfall payment, not a form of deferred compensation for previous service.

“We believe that compensation plans should align the interests of senior executives with the long-term interests of the Company. We oppose compensation plans that provide windfalls to executives that are unrelated to their performance. For these reasons, we question how our Company benefits from providing Government Service Golden Parachutes. Surely our Company does not expect to receive favorable treatment from its former executives?”

The Board recommended that shareholders vote against this idea from the AFL-CIO Reserve Fund.

Curiously, JPMorgan Chase is not the only serially charged Wall Street bank that wants its senior executives to land jobs in government or with regulators. As our readers might recall, we extensively covered how Citigroup – during its insolvency when it was being kept alive with taxpayer bailouts and massive secret loans at almost zero interest rates from the Federal Reserve – had a special deal with Jack Lew, who became President Obama’s Secretary of the Treasury.

During Lew’s Senate confirmation hearing it emerged that he had signed an employment agreement with his former employer Citigroup that would pay him a $940,000 bonus that he would have to otherwise forfeit unless he accepted “a full time high level position with the United States Government or a regulatory body.” Lew accepted the bonus from Citigroup, even though it was insolvent and living off the taxpayer at the time.

Because JPMorgan Chase and Citigroup have a similar history of being charged with serial crimes against the investing public and both are offering a financial incentive to their top execs to land jobs in government or with regulators, the public should assume the worst of this practice.

We also have to wonder if other major Wall Street banks are doing the same thing. After all, the top lawyers of these banks are allowed by the Justice Department to continue to hold secret meetings, even as market rigging charges proliferate.  Bloomberg News reported in 2016 that the general counsels of the biggest Wall Street banks had been meeting secretly for two decades with their counterparts at international banks. The 2016 secret meeting was held at a luxurious hotel in Versailles. Among the attendees were the following: Gregory Palm, part of the Management Committee at Goldman Sachs; Stephen Cutler of JPMorgan (a former Director of Enforcement at the SEC); Gary Lynch of Bank of America (also a former Director of Enforcement at the SEC); Morgan Stanley’s Eric Grossman; Citigroup’s Rohan Weerasinghe; Markus Diethelm of UBS Group AG; Richard Walker of Deutsche Bank (again, a former Director of Enforcement at the SEC); Robert Hoyt of Barclays; Romeo Cerutti of Credit Suisse Group AG; David Fein of Standard Chartered; Stuart Levey of HSBC Holdings; and Georges Dirani of BNP Paribas SA.

The Justice Department would seem to have solid grounds to stop these secret meetings. According to well established guidelines, the following protocol must be followed when conducting meetings between competitors to avoid the perception, or actual charges, of antitrust violations:

– Meetings must be regularly scheduled and should never be secret.

– A properly designated Chairman shall prepare and follow a formal agenda which should be reviewed in advance by legal counsel.

– Legal counsel should be present at all meetings.

– Formal written minutes of meetings should be taken and archived.

– Properly instituted bylaws should be followed.

– A Board of Directors should be properly instituted.

– Any company meeting the requirements of the bylaws should be allowed membership in the group.

Tragically, under both Democrat and Republican administrations, Wall Street’s greed and arrogance and serial crimes only seem to get worse, leading to the conclusion that Bernie Sanders’ call for a political revolution is not misplaced at all.

Bookmark the permalink.

Comments are closed.