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But
now it is clear: investors come first.
That is how activist investor John Harrington interprets a
recent decision by JPMorgan's board - chaired by Dimon - not to
convert itself to a "public benefit corporation," a Delaware
legal structure gaining attention among would-be financial
reformers.
JPMorgan's board cited a legal review it commissioned stating,
among other things, that when the interests of stockholders and
other constituencies conflict at a corporation like JPMorgan,
"the board's fiduciary duties require it to act in a manner that
furthers the interests of the stockholders."
That would not be the case for a public benefit corporation,
however. Directors at such companies must balance stockholder
interests with the interests of other constituencies, according
to the review sent to shareholder Harrington, who had requested
it.
Harrington said the document's details and the board's decision
show the limits of the sentiments espoused by Dimon and other
top CEOs when they issued their "Statement on the Purpose of a
Corporation" in 2019 calling on companies to look out for all
stakeholders.
"What they said was meaningless," Harrington said in a telephone
interview.
A JPMorgan spokesman declined to comment.
A representative for the law firm that wrote the report,
Richards, Layton & Finger of Wilmington, Delaware, also declined
to comment.
DO THE RIGHT THING
Harrington's effort is one of several campaigns aiming to move
corporate practices into line with some CEOs' increasingly
liberal rhetoric on hot-button issues like climate change and
income inequality. A Reuters analysis found shareholders have
often kept their leverage.
Other reformers have urged corporate boards to give their own
statements of purpose. A rare example came when tobacco company
Philip Morris International Inc in its proxy last year gave its
commitment to "delivering a smoke-free future" with products
scientifically shown to be less harmful than traditional
cigarettes. The statement reiterated what the company had called
its "strategic priority" in 2017.
Separately, some activists have urged companies to add workers
to their boards of directors. But of ten shareholder resolutions
filed in 2020 on the topic, none won more than 8% support of
votes cast, according to a review by Proxy Insight.
One company that has converted to a public benefit corporation,
software maker Veeva Systems Inc, won backing for the change
from 99% of votes cast last month.
Veeva's certificate of incorporation, sent by a spokesman, now
states that the company will be managed to balance stockholder
interests with those of its customers, employees and others. "We
believe this corporate structure reflects our guiding principle,
'do the right thing,'" the document states.
Harrington, the investor, has filed other shareholder
resolutions for this spring calling on additional banks to
convert themselves to public benefit corporations.
One recipient, Bank of America Corp, told Harrington in a Feb. 5
letter that it plans to hold a vote on his proposal at its
annual meeting.
But it also stated its board will recommend investors vote
against the idea for reasons including that it already operates
in a way that balances shareholder and stakeholder interests,
and because "The public benefit corporation model is new,
largely untested, and is therefore inappropriate for a company
of our size and complexity."
A Bank of America spokesman declined to comment further.
A spokeswoman for another recipient, Wells Fargo & Co, noted it
previously studied and rejected the idea.
In January 2020, Wells Fargo's board said it could already
consider stakeholder interests "without the significant
uncertainties, costs, and distractions" that conversion would
require.
(Reporting by Ross Kerber in Boston; Editing by Matthew Lewis)
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