Corporate Governance


FUNCTIONS OF THE BOARD



BOARD COMPOSITION



BOARD COMMITTEES



BOARD OPERATIONS



OTHER MATTERS



Functions of the Board
Criteria for composition of the Board, selection of new directors Setting the criteria for composition of the Board and the selection of new directors are Board functions. In fulfilling its responsibilities, the Corporate Governance & Nominating Committee, in consultation with the Chief Executive Officer, periodically reviews the criteria for composition of the Board and evaluates potential new candidates for Board membership. The committee then makes recommendations to the Board. The Chief Executive Officer and the Chair of the Corporate Governance & Nominating Committee shall extend the invitation to a new Board member. In general, the Board wishes to balance the needs for professional knowledge, business expertise, varied industry knowledge, financial expertise, and CEO-level business management experience, while maintaining within these criteria an appropriate gender and minority representation.

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Assessing the Board's performance The Corporate Governance & Nominating Committee annually reviews and reports to the Board on the performance of the Board as a whole with a view to increasing the effectiveness of the Board.

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Formal evaluation of the Chairman and the Chief Executive Officer The Board (non-management directors only) makes an evaluation of the Chairman and the Chief Executive Officer at least annually. This will normally be in January in connection with a review of executive officer annual compensation.

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Succession planning and management development Succession planning is considered at least annually by the non-management directors with the Chief Executive Officer. Generally, the Compensation & Management Development Committee considers management development in preparation for discussion by the full Board.

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Strategic reviews The full Board shall engage in discussions on strategic issues and ensure that there is sufficient time devoted to director interchange on these subjects.

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Board and management compensation review The Corporate Governance & Nominating Committee makes periodic recommendations to the Board regarding director compensation based on comparisons with relevant peer groups. The Board believes it is desirable that a significant portion of overall director compensation be linked to JP Morgan Chase & Co. stock, and the Board's total compensation includes approximately one-third cash and two-thirds stock-based compensation.

Non-management directors receive no compensation from the firm other than their Board compensation. Officer-directors receive no separate compensation for their Board service.

Compensation of officer-directors is approved by the Compensation & Management Development Committee and then submitted to the Board for its ratification. Compensation of senior management, other than officer-directors, is determined by the Compensation & Management Development Committee, which reviews its decisions with the Board.

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Board composition
Size and composition of the Board While the Board's size is set in the By-laws to be in a range of 8 to 18 directors, the preference is to maintain a smaller Board for the sake of efficiency. A substantial majority of directors will be independent directors under the New York Stock Exchange's independence standards.

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Definition of independence Independence determinations. The Board may determine a director to be independent if the Board has affirmatively determined that the director has no material relationship with the firm, either directly or as a partner, shareholder or officer of an organization that has a relationship with the firm. Independence determinations will be made on an annual basis at the time the Board approves director nominees for inclusion in the proxy statement and, if a director joins the Board between annual meetings, at such time. Each director shall notify the Board of any change in circumstances that may put his or her independence as defined in these Corporate Governance Principles at issue. If so notified, the Board will reevaluate, as promptly as practicable thereafter, such director's independence. For these purposes, a director will not be deemed independent if:

(i) the director is, or has been within the last three years, an employee of the firm or an immediate family member of the director is, or has been within the last three years, an executive officer of the firm; (ii) the director or an immediate family member of the director has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from the firm, other than (a) director and committee fees and pension or other deferred compensation for prior service (provided that such compensation is not contingent in any way on continued service) and (b) compensation received by a family member for service as a non-executive employee of the firm; (iii) the director is a current partner or employee of the firm's independent registered public accounting firm, an immediate family member of the director is a current partner of such accounting firm or a current employee of such accounting firm who personally works on JP Morgan Chase's audit, or the director or an immediate family member of the director was within the last three years (but is no longer) a partner or employee of such accounting firm and personally worked on JP Morgan Chase's audit within that time; (iv) the director or an immediate family member of the director is, or has been within the last three years, employed as an executive officer of a company in which a present executive officer of the firm at the same time serves or served on the compensation committee of that company's board of directors; or (v) within the preceding three years, the director accepted any consulting, advisory or other compensation from the firm, other than compensation in the director's capacity as a member of the Board or a committee of the Board or as a member of a board or committee of a board of a subsidiary of the firm.

An "immediate family member" includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person's home.

Relationship to an entity. The relationship between the firm and an entity will be considered in determining director independence where a director serves as an officer of the entity or, in the case of a for-profit entity, where the director is a general partner of or owns more than 5% of the entity. Such relationships will not be deemed relevant to the independence of a director who is a non-management director or a retired officer of the entity unless the Board determines otherwise.

For-profit entities. Where a director is an officer of a for-profit entity that is a client of the firm, whether as borrower, trading counterparty or otherwise, the financial relationship between the firm and the entity will not be deemed material to a director's independence if the relationship was entered into in the ordinary course of business of the firm and on terms substantially similar to those that would be offered to comparable counterparties in similar circumstances.

A director who is an employee, or whose immediate family member is an executive officer, of another company that makes payments to or receives payments from the firm for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues will not be deemed independent until three years after falling below such threshold.

For these purposes, payments exclude loans and repayments of principal on loans, payments arising from investments by the entity in the firm's securities or the firm in the entity's securities, and payments from trading and other similar financial relationships.

Where a director is a partner or associate of, or Of Counsel to, a law firm that provides services to the firm, the relationship will not be deemed material if neither the director nor an immediate family member of the director provides such services to the firm and the payments from the firm do not exceed the greater of $1 million or 2% of the law firm's consolidated gross revenues in each of the past three years.

Not-for-profit entities. The firm encourages contributions by employees to not-for-profit entities and matches such contributions by eligible employees to eligible institutions within certain limits by grants made by the firm (directly or through The JP Morgan Chase Foundation). The firm also supports not-for-profit entities through grants and other support unrelated to the Matching Gift Program. Where a director is an officer of a not-for-profit entity, contributions by the firm will not be deemed material if, excluding matching funds from the firm, they do not exceed the greater of $1 million or 2% of the not-for-profit entity's consolidated gross revenues.

Banking and other financial services. The firm provides banking services, extensions of credit and other financial services in the ordinary course of its business. The Sarbanes-Oxley Act prohibits loans to directors, as well as executive officers, except certain loans in the ordinary course of business and loans by an insured depository institution subject to Regulation O of the Board of Governors of the Federal Reserve System. Any loans to directors are made pursuant to applicable law, including the Sarbanes-Oxley Act and Regulation O. Regulation O also applies to banking relationships with certain family members of a director and to entities owned or controlled by a director. All such relationships that are in the ordinary course of business will not be deemed material for director independence determinations unless a director has an extension of credit that is on a non-accrual basis. Where a subsidiary of the firm is an underwriter in an initial public offering, the firm will not allocate any of such shares to directors.


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Former
officer-directors		 As a general rule, an officer-director may not serve on the Board beyond the date he or she retires or resigns as a full-time officer.

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Change of job responsibility A director will offer his or her resignation following the loss of principal occupation other than through normal retirement. Directors will provide prior notice in writing to the Corporate Governance & Nominating Committee of any change in their occupation or any proposed service on the board of a public or private company or any governmental position.

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Director tenure The Board does not believe it appropriate to institute fixed limits on the tenure of directors because the firm and the Board would thereby be deprived of experience and knowledge.

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Retirement age It is expected that non-management directors will retire from the Board on the eve of the annual meeting in the calendar year following the year in which the director will be age 70; provided, however, that a non-management director may stand for re-election (i) for one additional term if proxies for the next annual meeting will be solicited within six months of such director's 70th birthday or (ii) for one or more additional terms if the Board unanimously determines (with such director abstaining) to nominate such director for re-election to each additional term.


The Board expects non-management directors in the year prior to their scheduled retirement, and each year thereafter if they are re-elected to additional terms, to communicate to the Chairman, in advance of each annual election, an offer not to stand for re-election.  The Chairman shall refer the offer to the Corporate Governance & Nominating Committee for review. The Corporate Governance & Nominating Committee's review and recommendation will be presented to the Board for a determination whether the director's offer should be accepted or rejected.

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Limits on board and audit committee memberships Each person serving as a director must devote the time and attention necessary to fulfill the obligations of a director. Key obligations include appropriate attendance at Board and committee meetings and appropriate review of preparatory material. Directors are also expected to attend the annual meeting of shareholders. Unless the Board determines that the carrying out of a director's responsibilities to the firm will not be adversely affected by the director's other directorships: an officer-director will not serve on the board of more than two other public companies; directors who also serve as chief executive officers will not serve on more than a total of two public company boards in addition to the company of which they are CEO and the firm; and directors who are not chief executive officers will not serve on more than four public company boards in addition to the firm.

If a member of the Audit Committee wishes to serve on more than a total of three audit committees, the Board must approve such additional service before the director accepts the additional position.

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Majority voting for directors The By-laws provide for majority voting for directors in non-contested elections.  The vote required for election of a director by the stockholders shall, except in a contested election, be the affirmative vote of a majority of the votes cast in favor of or withheld from the election of a nominee at a meeting of stockholders. For this purpose, a "majority of the votes cast" shall mean that the number of votes cast "for" a director's election exceeds the number of votes cast "against" that director's election, with "abstentions" and "broker nonvotes" (or other shares of stock of the Corporation similarly not entitled to vote on such election) not counted as votes cast either "for" or "against" that director's election.  

In a contested election, directors shall be elected by a plurality of the votes cast at a meeting of stockholders by the holders of shares present in person or by proxy at the meeting and entitled to vote in the election. An election shall be considered contested if there are more nominees for election than positions on the board of directors to be filled by election at the meeting. 

In any non-contested election of directors, any incumbent director nominee who receives a greater number of votes withheld from his or her election than in favor of his or her election shall immediately tender his or her resignation, and the Board of Directors shall decide, through a process managed by the Corporate Governance and Nominating Committee, whether to accept the resignation at its next regularly scheduled Board meeting.  The Board's explanation of its decision shall be promptly disclosed through a public statement.

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Stock ownership requirements It is generally desirable for directors to own a significant number of shares or share equivalents of JP Morgan Chase & Co. stock, and for new directors to work toward that goal. Directors agree to pledge that for as long as they serve as directors of the firm, they will retain all shares of the firm's common stock purchased on the open market or received pursuant to their service as a Board member. Any exceptions to a director's pledge shall be discussed with the Corporate Governance & Nominating Committee.

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Board committees
Number of committees, reporting by committees and assignment and rotation of committee membership The Board as a whole is responsible for the oversight of management on behalf of the firm's shareholders. The Board is assisted in its oversight function by Board committees.

The Board has the following committees: Audit, Compensation & Management Development, Corporate Governance & Nominating, Public Responsibility, and Risk Policy, as well as a Stock Committee and a Board-level Executive Committee. The Board has allocated oversight of risk matters to the Audit Committee and to the Risk Policy Committee, with the Audit Committee responsible for discussion of guidelines and policies to govern the process by which risk assessment and management is undertaken. The number and responsibilities of committees are reviewed periodically.

Committees will generally report to the Board at the next regularly scheduled Board meeting following a committee meeting.

Membership on the committees is reviewed each year by the Corporate Governance & Nominating Committee and approved by the full Board, which also designates a chair or co-chair for each committee. Each committee member and chair serves at the pleasure of the Board. There is no strict committee rotation policy. Changes in committee assignments are made based on committee needs, director experience, interest and availability, and evolving legal and regulatory considerations.

Each of the members of the Audit Committee, the Compensation & Management Development Committee, and the Corporate Governance & Nominating Committee will be directors for whom the Board has made an independence determination. Officer-directors generally do not serve on any committee other than the Stock Committee and the Board-level Executive Committee. The Board-level Executive Committee is established with the expectation that it would not take material actions absent special circumstances. Officer-directors may attend committee meetings at the invitation of the committee chair.

In reviewing the composition of Board committees, the Board will also consider any listing and/or regulatory qualifications as may be applicable to specific committees.

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Board operations
Non-executive chairman The Board currently does not have a non-executive chairman but has no set policy on whether or not to have one.

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Presiding director The non-management directors shall appoint a Presiding Director who will preside at any meeting of the Board at which the Chairman is not present and at executive sessions for non-management directors.  The Presiding Director will facilitate communication between the Chairman and CEO and the non-management directors as appropriate and perform such other functions as the Board may direct.  The Presiding Director may call meetings of the non-management directors at such time and place as he determines.  Unless the non-management directors decide otherwise, the Presiding Director during the first 6 months of each year shall be the Chair of the Compensation & Management Development Committee and during the last 6 months of each year shall be the Chair of the Corporate Governance & Nominating Committee.

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Executive sessions for
non-management directors		 The non-management directors will generally meet in executive session as part of each regularly scheduled Board meeting, with the Presiding Director presiding.  These sessions will provide the opportunity for discussion of such other topics as the non-management directors may find appropriate, with discussion to be facilitated by the chair of the committee most relevant to the topic.

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Committee and Board agendas Committee agendas are prepared based on expressions of interest by committee members and recommendations of management. Committee chairs give substantive input to and approve final agendas prior to committee meetings. The Chairman of the Board prepares Board agendas based on discussions with all directors and issues that arise.

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Board and committee materials and presentations Information regarding items requiring Board and/or committee approval shall be distributed sufficiently in advance to permit adequate preparation. Financial information and press and analyst reports shall be provided monthly in order to ensure the Board is kept informed of developments between meetings.

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Regular attendance of non-directors at Board meetings Non-directors, including members of management, may be present at Board meetings at the invitation of the Chairman.

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Board access to management Board members have complete access to management. A director will not discuss with management investment research involving a company with which the director is affiliated.

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Board interaction with institutional investors and press JP Morgan Chase management is the contact with outside parties. From time to time, directors may be asked by the Board or management to speak with others, as appropriate.

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Confidentiality of information In order to facilitate open discussion, the Board believes maintaining confidentiality of information and deliberations is an imperative.

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Board access to outside resources The main responsibility for providing assistance to the Board rests on the internal organization. The Board and Board committees can, if they wish to do so, seek legal or other expert advice from a source independent of management and shall be provided the resources for such purposes. Generally this would be with the knowledge of the Chief Executive Officer, but this is not a condition to retaining such advisors.

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Director orientation and continuing education At such time as a director joins the Board, the Board and the Chief Executive Officer will provide appropriate orientation for the director, including arrangement of meetings with management. The Board considers it desirable that directors participate in continuing education opportunities and considers such participation an appropriate expense to be reimbursed by the firm.

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Code of business conduct and ethics JP Morgan Chase has a comprehensive code of business conduct and ethics that addresses compliance with law; reporting of violations of the code or of laws or regulations; employment and diversity; confidentiality of information; protection and proper use of the firm's assets; conflicts of interest; and personal securities and other financial transactions. Each director is expected to be familiar with and to follow the code of conduct to the extent applicable to them.

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Other matters
Transactions with immediate family members All financial services and extensions of credits provided by the firm to a director's spouse, minor children and any other relative of the director who shares the director's home or who is financially dependent on the director, or any such person's principal business affiliations (through ownership or as an executive officer), and all transactions between the firm and any such person's principal business affiliations for property, services or other contractual arrangements, must in each case be made in the ordinary course of business and on substantially the same terms as those prevailing for comparable transactions with nonaffiliated persons.

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Confidential voting It is the policy of the Board that proxies, ballots and voting tabulations that identify shareholders and how they have voted will be kept confidential, except as may be required in accordance with appropriate legal process or as requested by a shareholder, and that no inspector of election shall be an employee of the firm.

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Repricing of stock options It is the policy of the Board not to reprice stock options issued by the firm by reducing the option's exercise price. The Board favors equitable adjustment of an option's exercise price in connection with a reclassification of the firm's stock; a change in the firm's capitalization; a stock split; a restructuring, merger, or combination of the firm, or other similar events in connection with which it is customary to adjust the exercise price of an option and/or the number and kind of shares subject thereto.

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Bonus recoupment policy In the event of a material restatement of the Firm's financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firm's Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.

Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.

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Poison pills It is the policy of the Board with respect to shareholder rights plans of the firm, commonly known as poison pills, not to adopt a poison pill for the firm without submitting it to a shareholder vote, but we reserve the right to do so if in our fiduciary responsibility we deem it appropriate to do so. If in exercising our fiduciary obligations we adopt a poison pill without going to shareholders on a prior basis, we will submit the poison pill to a non-binding shareholder vote at the earliest next special or annual meeting of shareholders. It is also our policy that if we adopt any material amendment to the foregoing policy, we will submit any such amended policy to a non-binding shareholder vote at the earliest next special or annual meeting of shareholders.
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Proposed transactions It is the policy of the Board that the Chief Executive Officer will inform the Presiding Director about discussions the Chief Executive Officer may have with another party or that party's authorized designee regarding a proposed transaction with that party where (i) such discussions involve a clear expression of interest in addressing the terms of the proposed transaction, and (ii) such transaction, if consummated, would require approval by the shareholders of JP Morgan Chase & Co. under Delaware state law, or the rules and regulations of any stock exchange on which the firm has listed its stock.

The Presiding Director and the Chief Executive Officer will review with the Board, or a committee thereof, the process for communicating with the Board, or a committee thereof, about the proposed transaction as contemplated and described above, including the method and frequency of the communications.

Further, to the extent such a proposed transaction proceeds to the shareholder approval process, the Board will, consistent with its legal and regulatory obligations, review any proxy statement issued in connection with a proposed transaction requiring shareholder approval and additionally, will appoint a committee to assist it in this process (the "Designated Committee"). The Designated Committee may be an existing committee of the Board or an ad hoc committee, provided that any such committee shall be composed entirely of independent directors.

The Designated Committee will review, with the assistance of the firm’s senior management and financial and legal advisors, the "background of the merger" section of the proxy statement and will have the authority to make recommendations to the full Board.

In furtherance of the procedures established above, the Board and/or the Designated Committee may, at their discretion, seek advice and assistance from advisors and consultants, as they deem necessary. The Board and/or the Designated Committee will be provided the resources for such purposes.

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Communications with Board To contact any Board members or committee chairs, please mail your correspondence to: JP Morgan Chase & Co.

Attention (Board member)
Office of the Secretary
270 Park Avenue, 38th floor
New York, New York 10017

If you have a particular concern regarding accounting, internal accounting controls, or auditing matters that you wish to bring to the attention of the Audit Committee of the Board of Directors, please contact us:

By mail:

JP Morgan Chase & Co.
Attn: Chair, Audit Committee
c/o Global Security and Investigations Department
2 Chase Manhattan Plaza, 15th Floor
New York, New York 10081

By phone:
From within the Spanish, Canada and Latin America: 1-888-282-5867
From EMEA: 44-0207-325-9082 or 9261 or 1110
From Asia Pacific: 852 2800 1656 or 8780

By email:
fraud.prevention.and.investigation@jpmCHASE

You may report your concerns anonymously, if you wish. For complaints that are not anonymous, we will respect the confidentiality of those who raise concerns, subject to our obligation to investigate the concern and any obligation to notify third parties, such as regulators and other authorities.

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