Jamie Dimon has stepped down as CEO. Investors would like to have him on board as President.
(Photo: Reuters)
Shareholders of US financial giant JP Morgan seem really attached to longtime CEO Jamie Dimon. At least that is supported by a securities prospectus in which the Wall Street house has just stated that a “substantial majority” of investors want Dimon to remain on board as “President” after his resignation as CEO.
This is a very good and a very bad idea at the same time. The proposal is very good because Dimon’s successor would no longer enjoy the absolute power that the man who has led JP Morgan since 2005.
Right now, Dimon is CEO and President, so he controls himself. It’s a dangerous entity, because strong managers need even stronger controllers.
In the US financial scene, however, this accumulation of offices is more the rule than the exception. At Morgan Stanley, Bank of America and Goldman Sachs, the CEO also serves as President. This construction is called “Imperial CEOs” in technical jargon.
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The term itself shows how fundamentally wrong this construct is for a listed stock corporation, which should be much more like a democracy than a monarchy.
Solid succession planning is important
So the idea of breaking up the JP Morgan CEO’s power is a step in the right direction. However, it would be wrong if Dimon were to switch to the post of president.
Companies must not make themselves dependent on individual managers, no matter how successful and charismatic they may be. On the contrary, solid succession planning is one of the central tasks of every management board.
And the career of a talented manager is only complete with a successful exit. A fact that is not only difficult for Jamie Dimon and JP Morgan.
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