For many years, JPMorgan Chase & Co. CEO Jamie Dimon has been a media darling. If you've ever interviewed him – and I have – it's easy to see why. Most CEOs, it's fair to say, are the business-world equivalent of the "Nuke LaLoosh" character in Bull Durham: Coached to say nothing of interest, ever, in response to a reporter's question.
Mr. Dimon was refreshingly different: Responsive, direct, even blunt – and occasionally acknowledging his company's mistakes.
After a financial crisis that nearly brought down the global economy, however, his gift for gab has rung sour. Mr. Dimon, more often than not, has argued that bankers are the new victims, "under assault" by regulators in one memorable turn of phrase in January.
Mr. Dimon's latest salvo is more of the same. At an investment conference Wednesday, he said shareholders who follow the advice of proxy advisers like Institutional Shareholder Services in casting their votes are "lazy." As quoted by Bloomberg, Mr. Dimon said "God knows how any of you can place your vote based on ISS or Glass Lewis. If you do that, you are just irresponsible, I'm sorry. And you probably aren't a very good investor, either."
Mr. Dimon's comments are part of an ongoing campaign against proxy advisers for daring to suggest investors might actually withhold votes from a company's directors, cast a "no" vote in a company's "say-on-pay" measure, or suggest a company separate the roles of chairman and CEO in the name of governance. (As it happens, the advisory firms have made all three suggestions at JPMorgan, as recently as this spring.)
I spend a lot of time reading ISS and Glass Lewis reports, and can tell you what they do. They keep up on corporate governance and executive pay trends so that traditional money managers don't have to. In isolation, it can be hard to tell whether a company's board is well-composed, or whether a compensation plan is structured in shareholders' interests. It's the proxy advisers, who maintain massive databases on these sort of things, who help investors figure it out.
That doesn't make investors dumb, and it doesn't make the advisory firms too powerful, as some have suggested. A subscription to these firms' reports doesn't require a blood oath to vote the recommendations blindly; indeed, the voting results each spring show that some, but not all, institutional investors follow along.
Indeed, having read a few of these reports this spring, I've noted there are some say-on-pay votes where the proxy firms have recommended a "yes" vote where I might have been more inclined to say "no." It suggested to me that the firms aren't blindly bashing every company that makes its executives millionaires, instead saving its criticisms for the biggest offenders.
That JPMorgan Chase has run into so many issues with the advisory firms suggests where the problem truly lies.