It’s being quite a few days for corporate governance. First, the unprecedented (at least since our records began in 1996) shock yesterday of Sir John Bond’s ejection as Chair of Glencore Xstrata, whilst in the same week, the PR chicanery currently being played out in the US ahead of JPMorgan’s AGM next week over the question of whether the Chair and Chief Executive roles should be split out.

The events pose an important but little discussed question: Who should have the right to see shareholder voting instructions as they come in prior to the meeting day, and should they have the right to act upon that information?

It’s not unusual for the press to speak to major shareholders prior to a high profile vote. Nor is it unusual for shareholders to choose to put their views on the matter in hand on record, as has been the case this week (“JPMorgan investors take heat off Dimon“, FT, 14th May). However, especially for European investors, it is highly unusual for aggregated pre-meeting voting indications to become the subject of public commentary (” JPMorgan Insiders See Dimon Retaining Roles; Shareholder Votes Begin”, 15th May, op cit).

Why the big fuss this time?

With Dimon threatening to walk away if shareholders support the splitting of roles, thereby requiring him to relinquish the chair, the question is now material to the immediate valuation of the company. Investors generally don’t like uncertainty, and with commentators talking about the potential for a 10% drop in share price if the vote wins, access to information about how the vote might turn out is valuable.

Let’s be clear about one thing: although investors around the world may already have instructed how they wish to vote, they have not voted yet. The vote does not commence until shareholders at the meeting are invited to vote on the resolution in Tampa next week. Nor is Broadridge, from which the data has come, actually the entity tasked with formally tallying the votes at the meeting (don’t forget, they only have the information in the first place because of the regulation-supported monopoly the enjoy). That makes counting votes already submitted akin to counting the chickens before the eggs have hatched. Yet we are told that so far, the proposal to split the roles has 40% support, and that that means ““inside JPMorgan they believe they’re going to win this vote” (, op cit).

Investors, especially those outside the US, will be shocked to see that their private voting instructions may be used to try to influence other shareholders in their decisions on the same issue (in the same vein, investors should also be equally concerned that some proxy advisors are urging shareholders to support the split – it’s none of our business as analysts!).

Clearly, it’s in the board’s interest and it’s their prerogative to discourage shareholders from supporting the proposal. But to take advantage of their access to early voting intentions as a part of their strategy is, at best, very bad sportsmanship, at worst potentially manipulative – not least when the issue at hand is potentially immediately material.  This is especially true because access to the pre-meeting voting data is unavailable to all but the issuer – giving them a distinct information advantage (“Shareholders Denied Access to JPMorgan Vote Results“,, 15th May.  To European investors, this is nothing new – shareholder voting is a private matter between them and the company. However, the other side of the pond, things have never been as clear cut, and this week’s move by the US financial services trade lobby SIFMA (Securities Industry and Financial Markets Association) to prevent leakage of sensitive voting data by Broadridge is an important development in the US recognising the sanctity – and market value – of shareholder voting information. With the furore over Bloomberg accessing confidential user data, the breakdown of the LIBOR and oil price setting mechanisms, potential irregularities in transition management (to name but a few hot issues) the financial services indsutry also seems to be at last waking up to the importance of integrity in all aspects of investment operations.

There’s a reason why France has election laws that prohibit public opinion poll data being published in the final few days before an election. That’s because the chief architect of the Constitution of the Fifth Republic, Charles de Gaulle (not known for shunning powerful executive positions himself, don’t forget), recognised that the influence of the press and speculation about potential voting results can skew general opinion and the vote.

In the high stakes poker hand currently on the JPMorgan AGM table, the absence of a similar rule this time could prove significant in enabling Dimon to continue in both his current roles. Apart from the sheer quantity of votes cast against Bond, the other notable fact was the complete silence around the progress of the vote and its likely outcome which showed that we should not worry that confidential voting prevents the effective exercise of shareholder choice.

The JPMorgan/Dimon vote is a watershed in more ways than one. Let’s not miss this opportunity to ensure we have a proxy plumbing system which is fit for 21st century shareholder democracy.

Last Updated: 17 May 2013
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