Influential proxy adviser Institutional Shareholder Services has made a rare U-turn and is recommending that JPMorgan Chase shareholders support the bank’s pay plan for top executives, including Jamie Dimon.
ISS led resistance to the bank’s pay policies in 2022 and last week advised investors to oppose them again during a “say on pay” vote at the lender’s annual meeting on Tuesday.
However, ISS told clients this week that it had decided to change its recommendation after using faulty data when benchmarking the bank’s pay against peers. The change was first reported by Bloomberg.
In a letter to ISS last week, JPMorgan argued that ISS had wrongly analyzed pay data from private equity firm Blackstone, which led to a negative recommendation for JPMorgan.
In its updated pay recommendation, ISS said there was now reasonable alignment between JPMorgan’s pay and the bank’s performance, but added it still had concerns about how bonuses were calculated and announced.
JPMorgan, the largest US bank by assets, paid Dimon $34.5mn for 2022, unchanged from a year earlier after the lender posted record revenues of $128.7bn and net income of $37.7bn.
JP Morgan declined to comment.
JPMorgan shareholders last year voted against a pay plan for the bank’s management, mainly because of a single award given to Dimon, its longtime chief executive, and president Daniel Pinto. Vanguard, JP Morgan’s largest shareholder, joined the revolt.
The vote was non-binding but JPMorgan subsequently said it would not award special awards to Dimon in the future.
Over the years, Dimon has criticized what he sees as “lazy” shareholders who follow recommendations by ISS and Glass Lewis, which provides voting advice to investors in publicly traded companies. Last year, Dimon told shareholders that they “should [their] own homework.”
In its proxy statement to shareholders ahead of the annual meeting, JPMorgan disclosed that Pinto was paid $28.5mn and asset and wealth management boss Mary Erdos earned $25.5mn. Marianne Lake and Jennifer Piepszak, co-CEOs of the bank’s consumer and community banking division and Dimon’s potential successors, each earned $17.5mn.
Shareholders have generally signed off on packages for top bank executives this year, with many lenders receiving higher approval ratings during “say on pay” than in 2022.
A notable exception was Bank of America, where the percentage of shareholders voting at the annual shareholder meeting last month fell to 69 percent from 95 percent a year earlier.
Additional reporting by Stephen Gandel
