WSJ-NYT - The annual shareholders meeting for J P Morgan/Chase was held in Tampa, Florida on Monday, May 14, 2012. The meeting couldn't occur at a worse time after the disclosure of horrific trading loss the previous Thursday. Two majors items appeared on the Agenda: (1) Should Jamie Dimon remain as CEO, and (2) If he remains Chief Executive Officer , should he continue as Chairman of the Board. Both issues were eventually voted in the affirmative. It seemed shareholders had their chance to demote or even oust Mr. Dimon from one or both of those most important corporate positions. Many shareholders felt strongly that Mr. Dimon should be replaced, especially after the "London Whale" fiasco of losing more than $2 billion - and maybe as much as $4 billion - in crazy (it turned out) investments in derivatives called credit default swaps. Why didn't the shareholders vote negatively and "toss the rascals out"? As a practical matter, votes at shareholder's meetings don't carry the weight you might think they should. A ton - and a majority - of votes were probably declared by proxy BEFORE the meeting, before the London Whale Affair was made public on May 10, 2012, Mr. Dimon, apparently in late April, 2012, was advised of a potential major problem in the London investment office. In the ensuing 2 weeks or so, Mr. Dimon was trying to modify or at least calm a brewing storm. He couldn't as the trade values had started to skid, JPM was forced to come up with gobs of cash and tried to find some sort of buyers for all or at least part of their positions, to no avail. The point is - it's very doubtful many shareholders knew the enormity of the problem - Friday, before the Monday shareholders' meeting,
JPM announced a FURTHER LOSS OF $ 200,000,000 that single day and there were few if any buyers for their positions.
The shareholders' proxy votes were before the fact - before the announced losses. Mr. Dimon's jobs as CEO and Board Chairman were judged before the roof fell partly in.
No comments:
Post a Comment