>> http://dealbook.nytimes.com/2014/01/23/fined-billions-bank-approves-raise-for-chief/
A year after an embarrassing trading blowup led to millions of dollars being docked from Jamie Dimon’s paycheck, the chairman and chief executive of JPMorgan Chase is getting a raise.
JPMorgan’s board voted this week to increase
Mr. Dimon’s annual compensation for 2013, hashing out the pay package
after a series of meetings that turned heated at times, according to
several executives briefed on the matter. The raise — the details were
not made public on Thursday — follows a move by the board last year to
slash Mr. Dimon’s compensation by half, to $11.5 million.
When it made that deep pay cut, the board was
giving a stern rebuke over the fallout from the “London Whale”
multibillion-dollar trading blunder. This week, directors, gathered in a
conference room at the bank’s Park Avenue headquarters overlooking a
snow-covered Central Park, discussed what message their next decision on
the bank chieftain’s compensation would send.
The debate pitted a vocal minority of
directors who wanted to keep his compensation largely flat, citing the
approximately $20 billion in penalties JPMorgan has paid in the last
year to federal authorities, against directors who argued that Mr. Dimon
should be rewarded for his stewardship of the bank during such a
difficult period. During the meetings, some board members left the
conference room to pace up and down the 50th-floor corridor.
Details on the chief executive’s compensation will be disclosed in the coming days, possibly as soon as Friday.
A spokesman for the bank declined to comment.
Mr. Dimon’s defenders point to his active
role in negotiating a string of government settlements that helped
JPMorgan move beyond some of its biggest legal problems. He has also
solidified his support among board members, according to the people
briefed on the matter, by acting as a chief negotiator as JPMorgan
worked out a string of banner government settlements this year.
Also under his leadership, the bank has
generated strong profits and its stock price is up more than 22 percent
over the last 12 months. Some board members fault what they consider to
be overzealous federal prosecutors for the hefty fines, rather than Mr.
Dimon or the bank, arguing that JPMorgan is being penalized for the sins
of firms like Bear Stearns that it scooped up during the financial crisis.
But many of those very problems arose under
Mr. Dimon’s watch, including $1 billion in fines from regulators over
the trading blowup. Leaving his compensation unchanged could have sent a
symbolic message of contrition to authorities.
Instead, the board’s decision to raise his
pay may energize critics who have questioned whether the directors can
provide an effective check on the charismatic Mr. Dimon, who is both
chairman and chief executive. Some shareholders have argued for those
jobs to be split to limit his power, but a proposal for such a division
was handily defeated at the bank’s annual meeting last spring.
It is unlikely that Mr. Dimon will receive
anything near the $23.1 million he got for 2011, when he was the
highest-paid chief executive at a large bank. So far, none of the
biggest Wall Street firms have released the 2013 compensation for their
senior executives. Last year, Lloyd C. Blankfein, the chairman and chief executive of Goldman Sachs, took home $21 million for 2012, about double what Mr. Dimon got once the board slashed his pay. At Wells Fargo, John Stumpf, the bank’s chief executive, received $19.3 million for his work atop the country’s largest mortgage lender.
Early signs, like stock payouts, suggest that bank chief executives are headed for a pay increase this year. Morgan Stanley,
for example, gave James P. Gorman, its chief executive, a stock bonus
valued at approximately $5 million as part of his total compensation for
2013. That is about double the stock bonus he received a year earlier.
JPMorgan’s directors may have decided that
Mr. Dimon, as his peers may, should get a raise, but to ordinary
Americans — and possibly to regulators — the decision to increase his
compensation may seem curious given the banner penalties that federal
authorities have extracted from the bank. It is not unheard-of for chief
executives to lose their jobs when their companies have been battered
by regulators.
But a crucial difference is that JPMorgan’s
legal travails have not threatened the bank financially. While steep
legal fees did weigh on the bank’s bottom line, JPMorgan still reported
annual 2013 profits of $17.9 billion. And while other bank chief
executives stumbled during the financial crisis, Mr. Dimon never did,
emerging from the wreckage even more powerful.
Mr. Dimon’s star has risen more recently as
he took on a critical role in negotiating both the bank’s $13 billion
settlement with government authorities over its sale of mortgage-backed
securities in the years before the financial crisis and the $2 billion
settlement over accusations that the bank turned a blind eye to signs of
fraud surrounding Bernard L. Madoff.
Just hours before the Justice Department was
planning to announce civil charges against JPMorgan over its sales of
shaky mortgage investments in September, Mr. Dimon personally reached
out to Attorney General Eric H. Holder Jr.
— a move that averted a lawsuit and ultimately resulted in the brokered
deal. Just a few months later, Mr. Dimon acted as an emissary again,
this time, meeting with Preet Bharara, the United States attorney in Manhattan leading the investigation into the Madoff Ponzi scheme.
Still, JPMorgan’s board struggled to strike
the right balance in determining Mr. Dimon’s compensation, according to
the people briefed on the matter. Too large a pay increase might send
the wrong message to shareholders and regulators. Yet cutting Mr.
Dimon’s pay would, some board members feared, alienate the chief
executive.
Ultimately, those board members arguing to
hold the line pay lost out, conceding that while the perception of the
increase might be off-putting, the impact of cutting or keeping a lid on
his pay could have more profound implications within the bank.
Mr. Dimon is also benefiting, the people say,
from a view among some board members that the government’s assault on
JPMorgan is driven less by the bank’s actual transgressions and more by a
desire, stoked by anti-bank sentiment, to appear tough against Wall
Street, the people said.
Echoing that sentiment, Mr. Dimon said during
a television interview on Thursday in Davos, Switzerland, that “I think
a lot of it was unfair.” By JESSICA SILVER-GREENBERG and SUSANNE CRAIG January 23, 2014,
Psychopaths, Sociopaths, Criminally Insane & Homo Sapiens are not evolving when the most sick are in control
ReplyDelete"Anti-Bank"? THERE IS NO SUCH 'IDEA' "Bank" IN CENTURY TWENTY OR ONE OR LONG BEFORE ~~only credit~~ since the trade and exchange of commodities began. Thus, ANTI FRAUD and that is the real kicker here!
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