By David Henry
(Reuters) - JPMorgan Chase & Co's (JPM) board, under fire for failing to prevent the $6 billion "London Whale" trading losses last year, on Monday named two new directors and gave more power to its lead independent director, but critics said the moves did not go far enough.
The new directors include Linda Bammann, a bank risk expert who worked for JPMorgan's Chief Executive Jamie Dimon when she was at Bank One and JPMorgan. The other new director, Michael Neal, was until June the chairman and CEO of the GE Capital subsidiary of General Electric Co.
The board of the largest U.S. bank also said it was giving new powers to its lead independent director, Lee Raymond, including the ability to call board meetings any time. Previously, Raymond could only call meetings of other independent directors. Raymond is the former chairman and CEO of ExxonMobil Corp (XOM)
To some investors, Bammann is too close to Dimon, and the bank's steps to bolster the lead independent director role are undermined by the position being held by Raymond, a longtime Dimon backer.
"Bringing in someone who was a former deputy of Jamie Dimon's is absolutely the wrong move," said Michael Pryce-Jones, a spokesman for CtW Investment Group, which had campaigned this year against the re-election of three directors, two of whom have since resigned.
"These are just the wrong folks. There are plenty of outside perspectives they could have brought in. Instead, they didn't want to rock the boat."
The bank has for months been fending off shareholder complaints about Dimon's power over the board of directors, as well as the composition of the board. In May 2013, a group of investors tried to strip Dimon of his chairman title, arguing that the London Whale losses revealed that he needed oversight from a separate chairman.
Dimon threatened to quit if he lost his chairman title, and ended up winning a shareholder vote on the matter with a higher percentage of the vote than last year. But investors told Reuters before the vote that even if the CEO won the shareholder resolution, they would press for changes behind the scenes.
And in July, two of the three directors that investors had complained about resigned.
JPMorgan, the largest U.S. bank, has been under intense scrutiny from regulators and some shareholders since admitting in May 2012 that it would record trading losses from derivatives positions. The losses came to be known as the "London whale" trades because they were made by a trader based in the United Kingdom who took outsized positions.
BANC ONE DAYS
Bammann is expected to be formally elected on September 16, according to the announcement. Until July, she was a director of Freddie Mac (FMCC), the housing finance agency known as Federal Home Loan Mortgage Corp, which came under government receivership during the financial crisis. She was chief risk officer at Banc One Corp under Dimon and followed him to JPMorgan in 2004 when it acquired the smaller bank.
Neal plans to join the board in January after retiring at the end of 2013 from GE, where he is vice chairman. He developed "deep knowledge of global financial services and markets" in 26 years at GE Capital, JPMorgan said in the announcement.
The announced changes in board rules include having the independent lead director preside over meetings when the CEO has a conflict of interest, not just when the CEO is absent.
The board will not annually rotate the lead independent director position, the announcement said. The previous presiding director was appointed annually, according to the company's last proxy statement.
Reuters had reported last month that the bank was close to naming two new directors with expertise in risk and finance.
Shares of JPMorgan were up about 1 percent at $52.93 in early afternoon trading.
(Reporting by David Henry in New York and Aman Shah in Bangalore; Editing by Sreejiraj Eluvangal, Lisa Von Ahn and Bernard Orr)
- Board & Management Changes
- Jamie Dimon
- independent director