Tuesday, May 28, 2013

Jamie Dimon: Votes Have Consequences

The Wall Street Journal piece on the aftermath of J.P. Morgan's proxy victory makes the central point that we've made from the beginning, namely that the whole issue of better risk management, governance and allocation of time for CEO Dimon shouldn't turn into a personal referendum on Mr. Dimon. Of course, it did just that.

Now, come apocalyptic predictions from moguls who had Dimon's back.  This, for example from Marc Andreessen,

Mr. Andreessen, who runs venture-capital firm Andreessen-Horowitz, worries, perhaps overly so, that episodes like these give public capital markets a bad name. "My big concern is whether the public markets continue to function and whether it is still practicable to take companies public," he said.
Really?  The era of public equity ends with a disagreement over splitting the Chairman and CEO role?  I hardly think so.  Fraud, accounting misstatements, and secular mismanagement of shareholder assets over decades haven't killed the markets--yet, so this will be forgotten soon.

Except, Mr. Dimon is reported to have called institutional shareholders moaning how much the proxy fight took out of him.  If this is true, it is symptomatic of the corporate royalty mentality and the sense of entitlement.  JPM is a global powerhouse and an effective company, but that doesn't mean that it does everything right or that it doesn't make egregious mistakes.  Mr. Dimon should have said something like this to his opposing shareholders, "Look we're on the same side; we both want results, success and superior returns.  Somehow, this all got off track.  If you'd be amenable, let's talk privately about your concerns when you feel they're not being addressed.  I've got lots of active shareholders, and they're all important.  The lines of communication, directly to me if you need, are always open. Anything else you need to tell me and my team?"

The Journal writes, "To paraphrase what the economist Paul Romer once said about crises: "A catharsis is a terrible thing to waste."  I think that a pithier version of this notion comes from Bill George, who writes in his book on leadership, "Never Waste a Good Crisis."

JPM Morgan's CEO and board should pay attention.

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