Wall Street Finds New Way To Put Investors Second

Agenda-Setting Financial Insight.
Jan. 25 2013 3:14 PM

Wall Street Finds New Way To Put Investors Second

98844843
Goldman Sachs and JPMorgan are now trying to stifle investors from voting on legitimate matters at their upcoming annual meetings

Photo by Chris Hondros/Getty Images

Wall Street has found a new way to put shareholders second. While many banks are finally bowing to pressure to restrain compensation, Goldman Sachs and JPMorgan are now trying to stifle investors from voting on legitimate matters at their upcoming annual meetings.

Goldman asked the Securities and Exchange Commission for permission to omit a proposal that would require it to appoint an independent chairman. JPMorgan, meanwhile, wants the regulator to let it remove from its proxy an initiative to have the board of directors explore “extraordinary transactions that could enhance stockholder value” - in other words, a breakup.

Advertisement

Both suggestions are rational topics for debate. Calling for a bank to split the roles of chairman and chief executive is hardly a new concept. Last year, Goldman and Lloyd Blankfein, who holds both titles, negotiated their way out of putting the issue to shareholders by striking an agreement with aggrieved investors to revise slightly board oversight of executives.

Meanwhile, shareholders seeking ways to improve returns aren’t revolutionary either. Headline-making activists like Bill Ackman and Dan Loeb do it all the time. Sure, JPMorgan performs better than many of its rivals, delivering an 11 percent return on equity last year despite a whopping $6.2 billion trading loss. Even so, the bank’s shares still trade just below book value, a figure that essentially represents what the disparate parts should fetch if sold off.

Yet both Goldman and JPMorgan are claiming the ballot initiatives are, among other things, too “vague.” That can happen with flighty individual investors, but isn’t typically the case from established investors like union adviser CtW and the AFL-CIO, which put forward the two questions this year.

What’s odd is that both banks have made their cases before. JPMorgan boss Jamie Dimon regularly addresses why he thinks carving up big institutions isn’t the answer, including in his annual missives to shareholders. Goldman, like others, reviews its leadership structure each year.

If the crisis made anything clear, it’s that banks should be forced to defend their business models and corporate governance - regularly. Fighting to suppress such questions only makes it sound like these supposedly master sellers are afraid they can’t close. 

Read more at Reuters Breakingviews.

TODAY IN SLATE

Jurisprudence

Scalia’s Liberal Streak

The conservative justice’s most brilliant—and surprisingly progressive—moments on the bench.

Scotland Votes to Remain in U.K.

There’s a Way to Keep Ex-Cons Out of Prison That Pays for Itself. Why Don’t More States Use It?

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

Can Democrats Keep Counting on Republicans to Offend Women as a Campaign Strategy?

Culturebox

Theo’s Joint and Vanessa’s Whiskey

No sitcom did the “Very Special Episode” as well as The Cosby Show.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Cliff Huxtable Explains the World: Five Lessons From TV’s Greatest Dad

Why Television Needs a New Cosby Show Right Now

  News & Politics
Weigel
Sept. 18 2014 8:20 PM A Clever Attempt at Explaining Away a Vote Against the Farm Bill
  Business
Moneybox
Sept. 18 2014 6:02 PM A Chinese Company Just Announced the Biggest IPO in U.S. History
  Life
The Slate Quiz
Sept. 18 2014 11:44 PM Play the Slate News Quiz With Jeopardy! superchampion Ken Jennings.
  Double X
Doublex
Sept. 18 2014 8:07 PM Crying Rape False rape accusations exist, and they are a serious problem.
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Brow Beat
Sept. 18 2014 4:33 PM The Top 5 Dadsplaining Moments From The Cosby Show
  Technology
Future Tense
Sept. 18 2014 6:48 PM By 2100 the World's Population Could Be 11 Billion
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.