The
Shareholders at
Backers of the split say that's not enough. Much like the U.S. government, corporate leaders need to have proper checks and balances, said Paul Chesser, director of the corporate integrity project at the conservative-leaning National Legal and Policy Center. The group has put the issue up for a vote at
"If it's a chairman and a CEO, there really is no counter to them unless there's some real egregious conduct going on," Chesser said.
The proxy advisory firms Glass Lewis and Institutional Shareholder Services are backing the shareholder proposals at
"There is no evidence this makes a company better off," Dimon wrote in his annual letter to shareholders.
Some researchers who study the issue say Dimon has a point. Studies
There is, however, some evidence that companies with a separate chairman are less prone to instances of wrongdoing, Krause said.
That issue proved salient in 2016, when a series of consumer abuse scandals unfurled at Wells Fargo, which was led at the time by Chairman and CEO John Stumpf. Stumpf would soon be out, and the bank
Many large U.S. banks still have joint chairman and CEO positions. Citigroup is a notable exception, as is the auto lender Ally Financial.
But more companies are shifting toward splitting the roles, with 59% of S&P 500 company boards reporting that they had a separate chair and CEO last year, according to the executive search firm Spencer Stuart. That's up from 45% a decade ago and from just 16% in 1998, the firm said in an
In the banking industry, support for splitting the chairman and CEO jobs has ebbed and flowed at different times.
Cincinnati-based Fifth Third Bancorp stripped the chairman title from then-CEO Kevin Kabat in 2010, amid fallout from the 2008 financial crisis. But eight years later,
The question will come up again at the bank's annual shareholder meeting on April 24.
John Chevedden, a
The bank's board is recommending that shareholders vote against the proposal, saying that its current structure provides "robust and effective independent board oversight." That setup includes a strong lead independent director — former Pepsi executive Lionel Nowell — who regularly meets with other independent directors, Moynihan, shareholders and regulators.
The board at
"With Mr. Dimon serving as both Chairman and CEO, the Firm has delivered ROTCE that has consistently and substantially outperformed" its peers, the bank's board wrote, referring to return on tangible common equity, which is a common measure of shareholder returns.
"We are committed to independent leadership on our board," the Wall Street bank stated, adding that it has repeatedly disclosed it would "not hesitate to appoint an independent chair" if its governance committee decided that step was necessary.
Walter Gontarek, a visiting fellow at the UK's Cranfield University who has
Gontarek found in a recent paper that firms with a dual chairman and CEO can take on greater risk, but that linkage broke down when companies were subject to heightened regulatory supervision.
"The so-called agency costs of CEO duality can be mitigated when regulatory reach is greater," said Gontarek, a former banker who is CEO and chair of the London-based business lender Channel Capital Advisors.
Bank regulators in Europe generally don't permit the industry to combine the CEO and chair roles.
"The next few years will tell us if the U.S. market moves towards the European model in discouraging CEO and chair combinations or reverses course," Gontarek said.
One relevant factor is that big banks' investors are from all over the world, and combined chairman-CEOs are almost "unheard of' in parts of Europe, said Courteney Keatinge, senior director of ESG research at the proxy advisory firm Glass Lewis.
Keatinge, whose firm is recommending that shareholders vote for the chairman-CEO split at
"We really want as much independence as possible on the board because it ensures that shareholders' interests are being served," Keatinge said.
Krause, the Texas Christian University professor, said there are several trade-offs involved, pointing to potentially faster decision-making by a chairman-CEO but also the potentially increased ability to challenge CEOs if the two roles are split.
Ultimately the issue comes down to what board chairs and CEOs are "doing with their power," the type of social dynamics that are harder to capture in academic research, Krause said.
"It really matters who chairs the board, and by 'who' I don't just mean, 'Are they the CEO or not?'" Krause said. "I mean the person, the values, the governing priorities that they bring to that role, and that's very difficult to measure."