JPMorgan Names Two New Directors, Changes Board Rules

Monday, 09 Sep 2013 07:40 AM

 

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JPMorgan Chase & Co.'s board named two new directors and announced changes in its rules to assure its independence from management, four months after facing criticism for its oversight of Chairman and Chief Executive Officer Jamie Dimon.

The company said in a statement on Monday that it had moved to "codify" its existing governance practices by giving the title "lead independent director" to its current "presiding director," former ExxonMobil Corp Chairman and CEO Lee Raymond.

The board named as new directors Linda Bammann, a bank risk expert who worked for Dimon nearly a decade ago, and Michael Neal, a finance expert who until June was chairman and CEO of the GE Capital subsidiary of General Electric Co.

JPMorgan, the largest U.S. bank, has been under intense scrutiny from regulators and some shareholders since admitting in May 2012 that it had multibillion-dollar losses on derivatives contracts made by a trader known as the "London Whale" for the large size of the positions.

In shareholder voting in May, a proposal to strip Dimon of his chairman or his CEO title because of risk control failures revealed by the derivatives debacle was overwhelming defeated after lobbying by the company. But two other directors received relatively few votes for their re-election and left afterward as Raymond promised changes in the board.

Bammann is expected to be formally elected on Sept. 16, according to the announcement.

Until July, she was a director of Freddie Mac, 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 giving the lead independent director the authority to call a formal board meeting at any time, not just a meeting of independent directors. Also, the independent lead director will 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 1 percent at $53.08 in morning trading.

© 2014 Thomson/Reuters. All rights reserved.

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