SIFMA Ties Could Help Dimon Vote
JPMorgan Chase's (JPM) efforts to defend Jamie Dimon's dual leadership
role got some support last week from SIFMA, a trade group whose former
chief executive now works for the bank.
Veteran lobbyist Tim Ryan runs JPMorgan Chase's regulatory affairs, but
until January he was CEO of the Securities Industry and Financial Markets
Association. Now that trade group has intervened in a contentious
shareholder proposal to strip Dimon of his chairman title, in a way that
is likely to help JPMorgan Chase.
Last Friday, SIFMA instructed Broadridge Financial Solutions (BR), an
investor communications firm that is counting shareholder votes on behalf
of JPMorgan Chase, to stop sending real-time results to the American
Federal of State County and Municipal Employees, the New York City
Comptroller's Office and other sponsors of the proposal to separate the
roles of chairman and CEO, the
New York Times
reported on Thursday.
JPMorgan Chase spokeswoman declined to comment on what, if any,
conversations Ryan or the company has had with SIFMA about the
association's discussions with Broadridge. Shareholders will learn the
results of the hotly-contested vote this Tuesday in Tampa at JPMorgan
Chase's annual meeting.
Ryan's current role is part of his second tour at JPMorgan. Before joining
SIFMA in 2008, he was the bank's vice chairman of investment banking. He
served as director of the Treasury Department's former Office of Thrift
Supervision before joining JPMorgan Chase in 1993, and was a solicitor for
the Department of Labor earlier in his career.
SIFMA said in a statement that a working group of its members "had general
questions about the process and a vendor's authority to release
confidential information, and wanted SIFMA to raise these questions with
Broadridge or any proxy firm that would engage in this practice."
Its efforts to stop providing some updates on the voting results shines a
light on an obscure corner of the proxy voting process. Public companies
have no obligation under the Securities and Exchange Commission's rules to
provide running tallies of votes on so-called exempt solicitations, which
include proposals that ask shareholders to vote for or against a directive
to the company, such as the one that asks JPMorgan Chase to separate the
roles of chairman and CEO.
Lyell Dampeer, an executive at Broadridge, says that for several years
Broadridge had provided vote tallies to backers of proposals in return for
a pledge by the group that received the information to respect its
confidentiality. That practice, which Broadridge carried out at the behest
of the banks and brokers that hire it, reversed years of the companies'
declining to provide the information - a decision that is their
prerogative under SEC rules, Dampeer notes.
Last Friday, according to Dampeer, Broadridge received a call from SIFMA,
which relayed a directive by its members that Broadridge reverse course
and once again refrain from distributing the vote results. "Our contracts
generally require us to follow our bank and broker clients' direction,"
says Dampeer, who adds that Broadridge notified the SEC of the change.
"Absent some clarification at some point in the future by the SEC…our
obligation is to abide by the instruction."
Shareholders say the reversal makes little sense. "We think it's
outrageous," says Lisa Lindsley, the AFSCME's director of capital
strategies, who adds that her group hired Broadridge to distribute a
letter to shareholders of JPMorgan Chase that urged them to vote in favor
of splitting the chairman and CEO roles.
Lindsley says her group last received a Broadridge update on the JPMorgan
Chase vote results on May 6. "It was never a fluid process," Lindsley
says. "We had to beg for it every time."
She argues that the delay in getting the tallies also shows that the
proposal's sponsors have not been the ones leaking recent results of the
voting to the media.
Broadridge's Dampeer says the fees shareholders pay to distribute a
missive covers the cost to the company of the outreach but does not
include a right to receive vote totals. "I could understand that the group
saying that would have an expectation about getting voting, but we don't
have a direct contract with the group," he says. "We're only billing them
for…the distribution of the material."
Dampeer says that prior to SIFMA's request to stop providing updates,
Broadridge had a process in place that aimed to distribute vote tallies