The Jamie Dimon Witch Hunt


THE Jamie Dimon lynch mob is growing. It calls for the separation of the role of chairman and chief executive officer, attacking him for holding both at JPMorgan Chase.

 I have studied corporate governance for 35 years, and I have come across no evidence to suggest that anything would be gained by separating those roles.

While the model can work on occasion, it is surely no panacea that ensures good economic results or good governance. Last spring saw a record of 56 shareholder votes on leadership-role separation — with only four approved. This year looks to be similar, with calls for change at firms ranging from JPMorgan and the Walt Disney Company to Boeing and DirecTV.

The leaders of these companies have delivered their shareholders excellent returns and are the envy of their industries for business innovation, candor in governance and reliance on independent lead directors.

Disney stock trades at a record high, with profit soaring 32 percent across the company. DirecTV handily trounced earnings estimates, with earnings up 7.4 percent. Boeing’s briefly grounded Dreamliner is again aloft, and so are earnings, by 20 percent. And, despite last year’s notorious “London Whale” trading disaster, JPMorgan’s balance sheet was never in danger and Mr. Dimon generated a historic $21 billion in net income — all this with unparalleled transparency and candid self-criticism.

Do these companies really have poor governance that ought to be torn apart by shareholders?

The separation of roles at the top of corporate pyramids is not necessarily pointless. In theory, the chairman can be the guardian of the board’s agenda and ensure the independent oversight of management. The chief executive can then focus on strategic planning and effective execution.

This arrangement can work at companies during leadership transitions and when there are dominant shareholder blocs, like family control. Examples of companies with this model apparently working include some prominent ones like Ford Motor, Citigroup, Wal-Mart, Microsoft, Oracle, Tenet Healthcare, The New York Times and Hewlett-Packard.

In fact, this hydra-headed governance was quite useful recently. The chairman of H.P., the technology industry star Ray Lane, magnanimously stepped down as chairman following H.P.’s overpriced acquisition of Autonomy, a big data enterprise, which resulted in an $8.8 billion H.P. writedown. Mr. Lane and his fellow directors asserted soon after the purchase that they had been deceived by Autonomy’s fraudulent accounting, which went undetected when investigated by two leading audit firms.

While Mr. Lane was never a unique champion of this deal and fired the chief executive behind it, the proxy advisory firm ISS this week incited a shareholder revolt demanding more board accountability.

By taking the bullet, stepping down as chairman but remaining on the board, Mr. Lane made it easier for the new C.E.O. (and fellow director) Meg Whitman to continue executing a brilliant turnaround strategy.