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Discussion: Was Dimon's Raise Deserved?

In case you missed it, Jamie Dimon is getting a raise.

News broke late last week that JPMorgan Chase's (JPM) board had voted to increase the chairman and CEO's 2013 pay by 74%. Dimon – whose pay was cut last year to $11.5 million, following the London Whale scandal – is set to receive $18.5 million in restricted stock in addition to his $1.5 million base salary.

Now Bloomberg reports that Dimon might actually make another $34 million this year, should JPMorgan's board permit him to collect two million stock options originally granted in 2008.

This possibility and the board's initial decision elicited a certain amount of incredulity, given that over the last year, JPMorgan Chase has agreed to pay more than $20 billion in fines to settle various allegations of wrongdoing. Regulatory settlements address everything from the aforementioned Whale saga to energy market manipulation, crisis-era mortgage misdeeds and aiding and abetting Bernie Madoff's Ponzi scheme.    

"What was the board thinking?"writes Fortune contributor Eleanor Bloxham. "That for every thousand dollars a company pays out in penalties … they should kick back a dollar to the CEO who helped make it possible?”

Some pundits argued that, beyond the settlements, JPMorgan's performance hardly justified the increase.

"Dimon's pay increased far faster than did the company's stock,"writes Reuters Breaking Views columnist Antony Currie. "JPMorgan's shares were up a third, just keeping pace with U.S. universal banking rivals. Core earnings also weren't anything to brag about. At $42 billion, before taxes and provisions and after adjusting for one-off items, according to Citigroup analysts, that represented a 2.4% decline from 2012.”

But Dimon's always had his fair share of supporters and other analysts felt criticism of the board's decision – and the CEO himself – was overblown

Per The Street's Dana Blankenhorn: "Dimon put together a $23 billion contingency fund to pay for JPMorgan Chase's legal liability following the 2008 meltdown, along with those of subsidiaries it bought, and the bank now seems to have gotten out of its legal jams for less than that figure.”

Reports indicate the JPMorgan board itself was divided over the issue, but ultimately elected to raise Dimon's pay after deciding that the bank's year would have been a whole lot worse had he not been at the helm. The Daily Beast's Joshua M. Brown championed this determination and went on to argue that, according to this logic, Dimon is actually underpaid.

"Any chief executive who can steer their firm toward $18 billion in annual profits while under investigation by seven federal agencies, dozens of state regulators and two other foreign countries is surely worth many multiples of a measly $18 million,"he writes.

Dimon certainly isn't the first CEO to receive a big paycheck following a less-than-stellar year.  (As a Forbes column authored by American Banker Editor in Chief Neil Weinberg back in 2007 points out, former Bear Stearns CEO James E. Cayne earned $38 million in total compensation in 2006, even as his firm paid out a quarter-billion in fines.) But the JPMorgan chief's recent raise is sure to reignite debate over executive compensation and how bank CEOs should be judged.

Was Jamie Dimon's raise deserved? Why or why not? What factors should be used to determine an executive's compensation? Let us know in the comments section below.  

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at or follow her at Twitter @JeanineSko.


(5) Comments



Comments (5)
A Board of Directors and management that are totally irresponsible forgetting that one of their primary fiduciary responsibilities is to the stock holders. The leadership of the person appears to be most deficient in the ability to purchase other operations that resulted in the fraud, theft and other regulatory violations. One way to stop the bad management and board actions is to change tax laws to disallow any penalty payments and excess salary as tax deductions. By allowing these deductions their income taxes paid are reduced at the expense of all other tax payers. A fine for speeding is not tax deductible why should a fine for violating regulations in the finance world be deductible?
Posted by Alfred Kreps | Tuesday, January 28 2014 at 11:07PM ET
And who says crime doesn't pay?? But Jamie and JP Morgan Chase are still living in some fantasy that their legal troubles are settled. What part don't they get that half of the Attorney Generals in the country with California who just slaughtered their motion to dismiss for illegally and intentionally using fraudulent account information, manufactured proof of balance owed, robosigned affidavits with all incorrect information signed by the thousands without even verifying anything and one of my favorites one process server hand served hundreds of people in LA in a three hour time frame. I have driven in LA maybe with Santa's sleigh. Now let's look at the Mississippi Attorney General Lawsuit same items times 1000 more state and federal violations and their investigation prior to filing was 18 months and they obtained over 100k pages of evidence from Chase which just verified everything Chase employees testified to. Now that $13 billion settlement which Jamie is crying about the unfairness of didn't include billions more in monetary penalties and criminal charges due to their "cooperation with the federal OCC investigation and the fact the stopped filing new lawsuits against credit card customers and their illegal debt sales selling incorrect customer data saying it was ok because in the contract to the debt buyer they put "as is". However, these Attorney General investigations with several more states about to file prove the opposite in the state courts and their own information at Chase. I personally along with top Consumer Attorneys and Fraud Examiners across the country can't find a court house they aren't still filing the illegal suits in and in most states garnishing wages, seizing bank accounts and none of thee changes they swore to regulators were made since 2011 or even today. Now George Cannelous of the SEC was recently asked why no criminal charges and was quoted saying that Jamie and others in positions like his were "prominent members of society and banking". Hmmm. How do you get this "prominent status" that makes you above the law and gives you the right to intentionally abuse the judicial system to bypass state and federal consumer protection laws and literally steal billions of dollars. Keep the money and NEVER stop but just keep giving bogus promises to be good in the future somehow with a straight face. Now I have heard a lot of people questioning well then why is Madoff doing 150 years?? Easy the SEC and the DOJ White Collar Crime only acts when "investors" complain well the investors aren't going to complain they are making big bucks off from the fraud and the fact that it is at the expense of millions of Americans no regulatory agency is assigned to that little problem customers are now just the free play for Jamie's gambling habit. Many of these items exposed by me and thanks to the great work of some investigative reporters have been reported extensively here in American Banker.
Sign up at my website to keep track of updates in the fight back by myself and other former employees that refused to commit fraud for any of the TBTF banks and the third parties they like to blame everything on but actually majority own or operate them.
Follow on Twitter at @lindaalmonte
Posted by lalmonte | Tuesday, January 28 2014 at 8:18AM ET
Mr. Fortney overlooks other of the bank's "accomplishments" of Mr. Dimon's management, including originating & selling faulty mortgages, using fraudulent 'robo-signed' documents to sue credit card holders & mortgage borrowers in court; failing to make credit available in less-affluent communities resulting in the lowering of the bank's CRA rating; manipulating the energy markets in California and the Midwest increasing electric prices to consumers & businesses (an 'enhancement' to a business acquired with Bear Stearns); overcharging NY & FL homeowners for force-placed insurance on which the bank received kick-backs; manipulating bids in municipal securities auctions; and failing to take action against Ponzi-schemer Bernard Madoff despite internal concerns that led to the bank pulling its own money out of his funds.
I agree with Mr. Fortney that the Board undoubtedly considered Mr. Dimon's role in negotiating de minimis settlements with regulators for these nefarious activities. However, I share Sen. Warren's concern that these are dubious achievements for which to reward the CEO of a government-insured institution.
Posted by jim_wells | Tuesday, January 28 2014 at 8:17AM ET
I disagree with Mr. Wells. JPMC's board, as elected by the shareholders, are in a better position than Elizabeth Warren to determine Mr. Dimon's compensation. As the bulk of these penalties relate to prior actions by companies acquired by JPMC, Mr. Dimon's "culture" has been to respond to requests by Geithner & co. to do a national service, then to fix the underlying problems. Yes, London Whale does not fit this story line, and the Board whacked Mr. Dimon's pay last year for that mistake.
Posted by dave_fortney | Monday, January 27 2014 at 9:35PM ET
In rewarding Mr. Dimon like this for building a corporate culture that provoked more investigations, enforcement actions and monetary penalties from more US and international authorities than any other bank since the notorious BCCI, the JPMChase Board demonstrates convincingly that it places a higher value on money than it does ethics, honesty and integrity.

As Senator Elizabeth Warren put it, "If JPMorgan is so happy with their settlements that they are rewarding their CEO with a big raise, do you really think the federal bank regulators were tough enough?

She suggested that if regulatory settlements were so weak that Chase and other Too Big To Behave Banks are celebrating with pay raises, that it's pretty certain the deals aren't good deals for the American public.

When the leading "Bankster" is rewarded like this for leading an institution that repeatedly violates U.S. and international regulations - on a scale not seen in decades - it erases all doubt that reform of the U.S. financial markets has failed and that timid federal regulators, compromised corporate boards of directors and Banksters make the next Financial Crisis a question of "when" NOT "if."
Posted by jim_wells | Monday, January 27 2014 at 4:28PM ET
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