When it comes to shareholder votes, the running
tallies are a closely guarded secret. Only a handful of parties get a peek
into how these corporate battles are shaping up.
Now, in the midst of one of the most closely watched
investor votes in years — over whether to separate the roles of chairman and
chief executive at JPMorgan Chase — that protocol has changed. The firm that
is providing tabulations of the JPMorgan vote stopped giving voting
snapshots to the proposal’s sponsors last week. The change followed a
request from Wall Street’s main lobby group, the firm says.
The pension fund shareholders that are promoting a
split at the top of the bank are crying foul. Knowing the current tally is
critical for both sides in shaping their campaigns, they say — cutting off
access to them gives JPMorgan, which is getting frequent updates, an upper
“They have changed the rules in the middle of the
game and it has created an unfair advantage,” said Michael Garland,
assistant comptroller who heads corporate governance for the New York City
John Liu. “It’s like playing a game where only the home team gets to
know the score.”
JPMorgan declined to comment.
The results of the shareholder vote will be
announced on Tuesday at the bank’s annual meeting in Tampa, Fla. This week,
the shares of a number of big investors were voted. It is not known,
however, how the vote is trending.
A majority vote in favor of stripping Jamie Dimon of
the chairman’s job, while not binding, would be a heavy blow to the
influential chief executive. Last year, a similar proposal garnered the
support of 40 percent of the shares.
Broadly speaking, the ability to get real-time
voting information is crucial for both Wall Street firms and the
shareholders sponsoring proposals. A losing side may decide to pour more
resources into its campaign, making additional calls or send additional
correspondence to shareholders.
“It’s a critical part of the process,” said Charles
M. Elson, director of the John L. Weinberg Center for Corporate Governance
University of Delaware. He noted that “if you feel you need to win by
shutting off information, it calls into question the strength of your
Lyell Dampeer, a senior executive at Broadridge,
said his firm was required to give real-time results to companies, and for
years Broadridge gave that same information to proposal sponsors. But late
last week, he received a call from an employee of the Securities Industry
and Financial Markets Association, Wall Street’s main lobby group,
requesting that Broadridge cut off access to organizations that are
sponsoring proposals, he said. Sifma represents JPMorgan and other big banks
and brokerage firms.
Broadridge is a little-known firm that distributes
materials on behalf of banks and brokers and provides voting tabulations.
Mr. Dampeer said the brokerage firms were his clients so he was
“contractually obligated” to comply with their request. “It was a short
call,” he said.
“We don’t have a view on this but we are caught in
the middle,” Mr. Dampeer added. He said neither securities laws nor client
contracts said Broadridge had to give information to the sponsors of
proposals. “We act at the behest of our clients,” he said. And publicly
traded companies are entitled to updates on shareholder voting.
Sifma declined to answer questions. In a statement,
the lobby group said one of its working groups had concerns about “the
authority of a vendor to release confidential information” and that group
asked Sifma to pursue the issue. Executives at some banks were concerned,
according to people briefed on the matter, that shareholder groups were
leaking early vote tabulations.
The decision by Broadridge sheds some light on the
usually obscure world of shareholder voting. Mr. Dampeer did not know how
many other shareholders had been cut off from access, but he said the new
policy would apply to countless other votes around the country.
Broadridge informed the
Securities and Exchange Commission on Monday of its decision because the
agency regulates brokerage firms. A spokeswoman for the S.E.C. declined to
“If they aren’t providing results to one side, they
shouldn’t give it to the company,” said Brandon Rees, acting director of the
A.F.L.-C.I.O. Office of Investment.
For shareholders sponsoring the proposals, the
tallies are particularly important at companies’ annual meetings, one of the
few times when a broad swath of investors have access to management and
board members. William Patterson, the executive director of the CtW
Investment Group, which represents union pension funds and owns six million
shares in JPMorgan, said that when deprived of the initial tallies,
shareholders were at the whim of management.
“If you go in blind,” Mr. Patterson said, “you can’t
really make an informed case to management” at the annual meeting about
voting results “and hold them accountable.”
In the case of the JPMorgan vote, the stakes for
both sides are high.
If shareholders vote to sever the positions, it
would be a major victory for the sponsors and big shareholder advisory firms
like Institutional Shareholder Services and Glass, Lewis & Company, which
have urged investors to vote for the split. Some of the big groups
sponsoring this proposal have likened this effort to a presidential campaign
and they say a vote in the favor would set the tone for dozens of other
similar votes around the country.
For JPMorgan, a yes vote would put pressure on
JPMorgan’s board to split the two roles. Management would not be required to
do anything with the results, but failure to take some course of action
could lead to more unrest at the bank. Over the last year, JPMorgan has been
struggling with the fallout from a multibillion-dollar trading loss.
Behind the scenes, JPMorgan has been working to
persuade shareholders to support having Mr. Dimon keep both the chairman and
chief executive titles. He has been chief executive since 2005 and chairman
This Forum program was open, free of charge,
to anyone concerned with investor interests in the
development of marketplace standards for expanded access to
information for securities valuation and shareholder voting
decisions. As stated
in the posted
Conditions of Participation, the purpose of this public
Forum's program was to provide decision-makers with access to
information and a free exchange of views on the issues
presented in the program's Forum
participant was expected to make independent use of
information obtained through the Forum, subject to the
privacy rights of other participants. It is a Forum
rule that participants will not be identified or quoted
without their explicit permission.
This Forum program was initiated in 2012 in
collaboration with The Conference Board and with
Thomson Reuters support of communication technologies to address
issues and objectives defined by participants in the 2010 "E-Meetings"
program relevant to broad public interests in marketplace
practices. The website is being maintained to provide
continuing reports of the issues addressed in the program,
as summarized in the
January 5, 2015 Forum Report of Conclusions.
The information provided to
Forum participants is intended for their private reference,
and permission has not been granted for the republishing of
any copyrighted material. The material presented on this web
site is the responsibility of
Gary Lutin, as chairman of the Shareholder Forum.
is a trademark owned by The Shareholder Forum, Inc., for the
programs conducted since 1999 to support investor access to
decision-making information. It should be noted that we have
no responsibility for the services that Broadridge Financial
Solutions, Inc., introduced for review in the Forum's
2010 "E-Meetings" program and has since been offering
with the “Shareholder Forum” name, and we have asked
Broadridge to use a different name that does not suggest our
support or endorsement.