Proxy Blog

JPMorgan Chase & Co.

May 8, 2019

The annual proxy for this commercial and investment banking institution had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on gender pay, proxy access, and cumulative voting 

Magni voted as follows: 

  1. For and against the proforma proposals.
    -For and against directors  All of the board candidates are fine, except one. Ms. Bammann is an employee of the company and should not be on the board. With that one exception, the board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against say-on-pay”  The shareholder engagement activities, including the discussion of compensation, were disclosed. The peer group was listed, though the criteria was vague and subject to gerrymandering. 
  2. Against shareholder proposals.
    -Gender pay – Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.
    -Proxy access – The existing practices are comparable to other companies with good governance. The shareholder proposal effectively provided for a director to stand election repeatedly over many years, despite being nominated from shareholders representing a small minority of shares and the candidate receiving a few votes in each election.
    -Cumulative voting – New approaches to voting (e.g., cumulative voting, ranked choice) have some theoretical advantages. At the same time, these approaches make the voting process more complicated and explaining results becomes more difficult. The current approach has served companies well and is considered good governance. There are more important governance issues than to test a theoretical system on a major company.