Two directors at JPMorgan Chase & Co. (JPM), who have received lackluster support from shareholders, resigned on Friday, the latest change in the aftermath of a multibillion-dollar trading loss last year.
David Cote, the chairman and chief executive of Honeywell International Inc. (NYSE:HON), resigned after five years with the bank. Ellen Futter, the president of the American Museum of Natural History, departs after 16 years, JPMorgan Chase & Co. (NYSE:JPM) said in a news release on Friday.
JPMorgan criticized in the wake of trading loss
Both Mr. Cote and Ms. Futter, members of the bank’s risk committee, were buffeted by criticism in the wake of trading losses of more than $6 billion last year, according to JPMorgan Chase & Co. (NYSE:JPM)’s chief investment office in London. Some investors said that the board’s risk committee lacked the financial prowess to safeguard against the kind of trading losses that hit the nation’s largest bank, as noted in The New York Times.
The trading debacle was also widely viewed as a black eye on the leadership of Jamie Dimon, the bank’s charismatic chairman and chief executive. A shareholder proposal to split Mr. Dimon’s two roles, while aimed at bolstering corporate governance, became a kind of referendum on Mr. Dimon’s stewardship of the bank.
I.S.S cited “material failures of stewardship and risk oversight”
Despite JPMorgan Chase & Co. (NYSE:JPM)’s overwhelming support for its board, criticism mounted as the annual meeting drew near in May.
Ahead of the meeting, an influential shareholder advisory firm, Institutional Shareholder Services, or I.S.S., urged shareholders not to vote for three directors, including Mr. Cote and Ms. Futter.
In its report, the firm cited “material failures of stewardship and risk oversight” in the wake of the trading loss last year. For the advisory firm, it was a rare challenge, since the company noted that it only recommends that shareholders oppose directors under “extraordinary circumstances.”
Hurdle for JPMorgan Chase’s reputation restoration
The report, which came amid vocal cries for an overhaul of JPMorgan Chase & Co. (NYSE:JPM)’s board leadership, was another hurdle for the bank, as it worked to restore its reputation as an astute manager of risk—an accolade JPMorgan won after emerging from the 2008 financial crisis in far better shape than its rivals.
While all three directors, including Cote andFutter, had served on the risk committee when JPMorgan Chase & Co. (NYSE:JPM) navigated through that crisis, I.S.S. criticized them for not having strong enough backgrounds in risk management. Its report said “it is odd” that the bank’s biggest rivals have managed to find directors with stronger qualifications.
Ms. Futter was ultimately re-elected with the lowest amount of support, only 53.1 percent of the vote. Mr. Cote was re-elected with 59.3 percent of the vote. “I want to thank Ellen and Dave for their dedicated service to our firm,” Dimon said in a statement. “We have learned a great deal from both of them and will miss having them as members of our board.”
Dimon also reiterated his support for Cote on Friday. “As chairman and C.E.O. of Honeywell, Dave brought exceptional experience to JPMorgan Chase & Co. (NYSE:JPM) across a broad spectrum of issues,” Dimon said in a statement. “He is a highly talented executive, and we were all fortunate to benefit from his knowledge and leadership.”