Executive Compensation – JPMorgan Chase & Co. (2012)
WHEREAS:
Income inequality is a growing problem in the United States. According to the U.S. Census Bureau, in 2010, 46.2 million Americans lived in poverty—including more than 1 out of every 5 American children. (http://www.census.gov/hhes/www/poverty/data/ incpovhlth/2010/highlights.html) Many in America’s once robust middle class are now struggling to make ends meet.
While the bottom 99 percent of Americans face increasingly tough times, the share of income going to the top 1 percent, especially the top 0.1 percent, continues to grow. An October 2011 report from the Congressional Budget Office found that in 1979, the top 1 percent received about the same share of income as the bottom 20 percent; in 2007 the top 1 percent received more income than the bottom 40 percent combined. (http://www.cbo.gov/ doc.cfm?index=12485) According to the economist Joseph Stiglitz, the richest 1 percent of Americans now takes in nearly a quarter of our nation’s income. (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105)
The compensation packages of Chief Executive Officers and other senior executives play a significant part in the growing income inequality in the United States. A 2010 working paper by professors at Williams College and Indiana University, entitled “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality”, found that executives, managers, supervisors, and financial professionals account for about 60 percent of the top 0.1 percent of income earners in recent years, and about 70 percent of the increase in the share of national income going to the top 0.1 percent. (http://ideas.repec.org/p/wil/wileco/2010-24.html)
Growing income inequality and the level of senior executive compensation at JPMorgan Chase & Co.—the Company’s Chief Executive Officer was given $20.8 million in total compensation for 2010, roughly 420 times the real median household income in 2010—combined with its perceived role in the 2008 financial crisis, has focused public ire on the Company. (http://www.census.gov/newsroom/releases/archives/income_wealth/ cb11-157.html) The Occupy movement, with its focus on the inequalities between the extreme wealth of the top 1 percent and the struggles of the other 99 percent of society, held demonstrations outside of our Company’s offices. Our Company has also been a primary focus of the Move Your Money project, a campaign that aims to encourage divestment from Wall Street banks. (http://moveyourmoneyproject.org/our-story)
A Watson Wyatt survey conducted before the 2008 financial crisis found that 85 percent of institutional investors believed that the prevalent executive compensation system in the United States was damaging to Corporate America’s image. A separate Watson Wyatt survey of 50 directors serving on corporate boards found that 61 percent believed that most executives were dramatically overpaid and 79 percent believed the executive pay model had damaged Corporate America’s image. (http://www.watsonwyatt.com/render.asp?catid=1&id=16180)
RESOLVED: Shareholders request that a committee of independent directors of the Board assess how the Company is responding to risks, including reputational risks, associated with the high levels of senior executive compensation at our firm and report to shareholders (at reasonable cost and omitting proprietary information) by December 31, 2012.v
JP Morgan – Board Membership in the U.S. Chamber of Commerce
WHEREAS
Many investors are concerned about our company’s role as a Board member of the U.S. Chamber of Commerce given a number of high profile as well as partisan positions by the trade association that may contradict our company policies and programs.
JP Morgan is a key part of the decision-making process that shapes the work of the U.S. Chamber. The web site of the U.S. Chamber describes the role of Directors as follows: “Directors determine the U.S. Chamber’s policy positions on business issues and advise the U.S. Chamber on appropriate strategies to pursue. Through their participation in meetings and activities held across the nation, Directors help implement and promote U.S. Chamber policies and objectives.”
JP Morgan believes, with good cause, that the U.S. Chamber is a constructive leader for business on many issues and wishes to continue its members in the Chamber. Since our company has a Director on the Board, investors are likely to assume that our management stands firmly behind the U.S. Chamber’s lobbying, political spending, legal actions and public statements on major policy issues.
Yet we know that many companies have expressed deep concerns about the disconnect between their own policies and the positions of the U.S. Chamber, including its:
- Strident, politically partisan positioning during recent elections.
- Hostile opposition to climate change legislation and decision to sue the U.S. Environmental Protection Agency to limit its ability to regulate carbon emissions.
- Defense of BP after the oil spill.
- Pledge to dismantle healthcare reform and to help unseat members of Congress who voted for the legislation.
- Petitions to the Department of Labor challenging investors who, in exercising their fiduciary responsibilities, consider environmental, social and governance factors in company engagements and proxy voting.
- Recent announcement in November 2010 of an initiative to oppose new regulations being proposed in the implementation of the Dodd-Frank bill.
Many companies, and investors, that are committed to sustainable business practices are very concerned about these and other actions of the U.S. Chamber. However, Chamber Board members representing companies who share these concerns often do not exercise their responsibility to shape its policies and programs, nor do they challenge initiatives that they believe undercut their own business actions or explain publicly what their own positions are when the Chamber lobbies speaks out or sues.
A number of our company’s own policies and programs the environment, climate change and political spending stand in stark contrast to the actions of the U.S. Chamber. We believe that our company should utilize its position on the U.S. Chamber Board to advance Pfizer’s positions and help protect our reputational and competitive position. Passive acceptance by Directors of the U.S. Chamber is neither good governance nor responsible oversight.
With an organization as visibly aggressive as the Chamber, it is vitally important for our company and its Board member to have a plan on how to advance your positions and turn the Chamber in another direction if necessary.
Hence, investors plan to present the following resolution for action at the 2011 stockholders meeting. We are hopeful that this resolution will encourage our Board and senior management to re-evaluate our role as a Board member of the U.S. Chamber of Commerce and to take the necessary steps to end the contradictions between our company’s policy positions and those of the U.S. Chamber.
RESOLVED
The shareholders request that the Board of Directors initiate a review of our role on the Board of the U.S. Chamber of Commerce that includes an evaluation of:
- The consistency between the U.S. Chamber’s policies and our company’s priority environmental, social and governance (or corporate responsibility) policies and programs. As part of this process, particular focus should be on the Chamber’s new regulatory initiative to block or stall emerging regulation through legal suits or pressure on congressional representatives and regulators.
- Options to distinguish, as necessary, our company’s position from that of the U.S. Chamber such as:
- Stating publicly that the Chamber’s position does not reflect our company’s views on specific issues;
- Requesting that the Chamber state publicly that members have different and varied positions;
- Working with other Board members to ensure varying and diverse opinions are expressed at the Forum in a democratic process.
- Dues and additional payments made, how they are utilized, and if any restrictions should be placed upon them (e.g. limits on monies used for political spending and specific election contests).
- The governance of the U.S. Chamber and our role as a Board member, including oversight and checks and balances, and our responsibilities with respect to Chamber programs and initiatives. This process should also address how Board members evaluate and provide feedback on the performance and compensation of the Chamber’s CEO.
- How our company can engage more effectively with investors and other stakeholders on this issue.
The results of this review should be made available to investors by October 1, 2011.
Shareholder Proposal on Sudan Presented at JP Morgan Chase Stockholder Meeting
Statement at JP Morgan Chase Stockholder Meeting in Support of
Resolution No. 10 Concerning Human Rights Policies
May 20, 2008
Good morning, Mr. Chairman, Board of Directors & my fellow shareholders. I am presenting this proposal on behalf of Trillium Asset Management Corporation, the Calvert Group, Amnesty International and the General Board of Pensions and Health Benefits of the United Methodist Church. [The proposal received 7.5% support from fellow shareholders.]
Resolution No. 10 calls for a report to shareowners discussing how our investment policies address or could address human rights issues, with a view toward adding appropriate policies and procedures to apply when a company in which we are invested is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.
As you know, the massacres perpetuated in Darfur by the Sudanese government – which the current Administration has labeled a genocide — were the catalyst for this proposal. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civilians in the region have been displaced.
Much of the revenue fueling this conflict is generated by Sudan’s oil industry. With little capital or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.
In 2007, working with organizations that have expertise on the conflict in Sudan, we and other investors began to approach companies in our portfolio with known relationships to these four oil companies. Our request to JP Morgan Chase and other prominent Wall Street firms is that you engage with these companies. Use any influence you have to encourage them to press the Sudanese government to accept the deployment of UN peacekeeping forces. It will mean something to these companies to hear you, as one of their investors and a potential or actual investment banking services provider.
Many of their responses we’ve received from companies we’ve engaged is encouraging. Morgan Stanley has written to companies of concern to express their clients’ concern about Darfur, and empowered its internal “franchise committee” to consider human rights matters when reviewing deals. Citigroup has stated its support for UN Security Council Resolution 1769 calling for the deployment of a peacekeeping force. Merrill Lynch and T. Rowe Price have agreed to review human rights organizations’ corporate profiles in their research processes, and Merrill will consider offering Sudan-free investment products.
JP Morgan Chase has taken this proposal very seriously. We are grateful for the careful attention and consideration that it has been given, and we have been assured that our dialogue with senior management will continue beyond today. Because of the urgency of the crisis in Sudan, however, it is deeply disappointing that JPMC has not taken any measure comparable to those of other firms. Your new statement on human rights is extremely vague in terms of providing guidance on how this company will respond to the situation in Sudan and others like it. In our discussions, we will encourage you to take leadership by sending a clear signal to the global community that JP Morgan Chase will not finance or profit from, directly or indirectly, business activities that violate human rights in the Sudan or elsewhere. Accordingly, we call on shareholders present here today to vote their shares in favor of this proposal, as a strong signal to management that a strong policy is warranted.
Report on How Investment Policies Address Human Rights Issues – JPMorgan Chase & Co.
HUMAN RIGHTS AND OUR INVESTMENT PORTFOLIO
WHEREAS
The issue of Human Rights increasingly impacts investors and companies alike. Company reputations are affected by both direct and indirect involvement in human rights violations. Operating in countries with clear patterns of these violations, such as Sudan and Burma, may heighten reputational and financial risk. Furthermore, companies can face similar risks when they or their suppliers are found to be using forced labor, discriminating against employees, or committing other such abuses.
Proponents believe that institutional investors, including asset management firms such as JPMorgan Chase & Co., bear fiduciary and moral responsibilities as owners of stock in companies that may be connected to human rights violations. Thus we are encouraging the Corporation to report on policies and guidelines that address these issues. This report and guidelines can address how the Corporation as a shareholder can most effectively respond to these human rights issues, including strategies for shareowner engagement with the companies and/or divestment of such stock as appropriate.
RESOLVED
Shareowners request that the Board of Directors authorize and prepare a report to shareowners which discusses how our investment policies address or could address human rights issues, at reasonable cost and excluding proprietary information, by October 2008.
Such a report should review the current investment policies of the Corporation with a view toward adding appropriate policies and procedures to apply when a company in which we are invested, or its subsidiaries or affiliates, is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.
Supporting Statement
Proponents believe one example, clearly demonstrating the need for this report, concerns the ongoing atrocities in Sudan, and how certain types of foreign investment contribute to the conflict.
Sudan’s western region, Darfur, continues to experience human rights abuses on an unimaginable scale, including systematic and widespread murder, torture, rape, abduction, looting and forced displacement. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civilians in the region have been displaced.
Much of the revenue fueling this conflict is generated by Sudan’s oil industry. Rather than funding social development, the majority of the revenue is funneled into military expenditures.
With little capital or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.
Over 20 US states and 50 colleges have adopted Sudan investment policies, including engagement, screening and divestment, regarding these and other foreign companies operating in certain sectors in Sudan. A 1997 presidential executive order generally bars American companies and citizens from conducting business in Sudan. In 2007, President Bush reinforced that executive order.
Proponents believe that JPMorgan Chase & Co., as an investor, has a responsibility to address this internationally condemned conflict in the Sudan.
J.P. Morgan Chase & Co.- Human Rights/Investment Portfolio
WHEREAS
The issue of Human Rights increasingly impacts investors and companies alike. Company reputations are affected by both direct and indirect involvement in human rights violations. Operating in countries with clear patterns of these violations, such as Sudan and Burma, may heighten reputational and financial risk. Furthermore, companies can face similar risks when they or their suppliers are found to be using forced labor, discriminating against employees, or committing other such abuses.
Proponents believe that institutional investors, including asset management firms such as JPMorgan Chase & Co., bear fiduciary and moral responsibilities as owners of stock in companies that may be connected to human rights violations. Thus we are encouraging the Corporation to report on policies and guidelines that address these issues. This report and guidelines can address how the Corporation as a shareholder can most effectively respond to these human rights issues, including strategies for shareowner engagement with the companies and/or divestment of such stock as appropriate.
RESOLVED
Shareowners request that the Board of Directors authorize and prepare a report to shareowners which discusses how our investment policies address or could address human rights issues, at reasonable cost and excluding proprietary information, by October 2008.
Such a report should review the current investment policies of the Corporation with a view toward adding appropriate policies and procedures to apply when a company in which we are invested, or its subsidiaries or affiliates, is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.
SUPPORTING STATEMENT
Proponents believe one example, clearly demonstrating the need for this report, concerns the ongoing atrocities in Sudan, and how certain types of foreign investment contribute to the conflict.
Sudan’s western region, Darfur, continues to experience human rights abuses on an unimaginable scale, including systematic and widespread murder, torture, rape, abduction, looting and forced displacement. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civilians in the region have been displaced.
Much of the revenue fueling this conflict is generated by Sudan’s oil industry. Rather than funding social development, the majority of the revenue is funneled into military expenditures.
With little capital or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.
Over 20 US states and 50 colleges have adopted Sudan investment policies, including engagement, screening and divestment, regarding these and other foreign companies operating in certain sectors in Sudan. A 1997 presidential executive order generally bars American companies and citizens from conducting business in Sudan. In 2007, President Bush reinforced that executive order.
Proponents believe that JPMorgan Chase & Co., as an investor, has a responsibility to address this internationally condemned conflict in the Sudan.
