Advisory firm attacks Dimon's cash bonus

Shareholders at JPMorgan Chase should vote against Jamie Dimon's pay package because the board awarded him a "large discretionary cash bonus . . . without a compelling rationale", according to ISS, which advises institutional investors.

The advisory notice from ISS sets up another potentially troublesome annual meeting for JPMorgan and Mr Dimon - the chairman and chief executive, who has run the bank since 2005 - after a string of difficult encounters in recent years.

ISS, whose advice is followed by many large pension plans and other institutional investors, said on Wednesday that the $7.4m cash bonus for 2014 was not justified. Mr Dimon also made $1.5m in base salary and $18.5m in restricted stock.

In its circular to shareholders, JPMorgan said that Mr Dimon's pay "reflects our disciplined pay-for-performance framework". It said he had led the bank to an improved market share and met or exceeded targets, and his performance "was a large contributing factor to the shareholder value that continues to be delivered".

JPMorgan said it was not increasing Mr Dimon's overall pay but paying a bigger proportion in cash in line with its traditional mix of remuneration.

ISS said investors should vote to install an independent chairman.

In 2014 JPMorgan avoided a third successive showdown with shareholders by convincing activists to forgo a vote on whether to split the roles in exchange for strengthening the role of lead independent director, held by Lee Raymond.

In 2013, Mr Dimon survived a contentious vote on his leadership after the 'London Whale' trading fiasco, which cost the bank more than $6bn. Shareholders, some of whom were worried that Mr Dimon would leave if he were stripped of the chairman title, registered a large protest vote against three other directors.

In 2012, a larger bloc of shareholders protested against the unified chief executive-chairman role. JPMorgan is among the majority of large US financial institutions, including Goldman Sachs and Wells Fargo, in having a single executive hold both roles.

Bank of America recently awarded the chairman title to chief executive Brian Moynihan, reversing a period where the roles were split as recommended generally by many corporate governance advocates and preferred by many institutional investors. Citigroup is alone among the top US banks in having an independent chairman.

Separately on Thursday, JPMorgan disclosed that it was under investigation by French prosecutors over a "series of transactions entered into by senior managers of Wendel Investissement" between 2004 and 2007. A person familiar with the matter said the bank had provided financing for the deals, which were transparent to French tax authorities.

Wendel, the French private equity firm, said: "The Wendel group is not involved in this case. Therefore, we do not know anything about possible charges filed against JPMorgan and found out about a possible investigation in the press."

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