Dimon Promises JPM Stability After 'Too Much Turnover'

Even Jamie Dimon thinks his bank had "too much turnover" in its top ranks last year.

The chief executive of JPMorgan Chase (JPM) acknowledged as much to analysts on Wednesday, adding that his massive overhaul of the bank's senior management would "hopefully" create more stability.

"It is too much turnover, but … if I have 15 people in the operating committee, you should assume that 15% to 20% every year will turn over. Some years will be zero and some years will be more. When you have reorgs and stuff like that, it is a little bit more," Dimon said in response to an analyst question on a conference call to discuss the bank's fourth-quarter earnings. "Hopefully, you're going to have stability. We have got a great management team."

Dimon shook up that management team in a series of reorganizations last year, after a massive trading loss in the bank's chief investment office came to light. Since April, he has replaced JPMorgan's chief financial officer, chief investment officer and the heads of its consumer, commercial and investment banking businesses. Dimon also collapsed the bank's corporate, treasury and investment bank businesses into one unit and folded its mortgage banking unit into the consumer and community business.

"All the people in these jobs have been here a long time and they are very good. I mean I think it is an exceptional management team," Dimon said during the call. "Remember, if you were on my board of directors, you would be asking me, in fact instructing me, to make sure you were putting in place in big jobs the people who have to be tested to see if they can do my job. … That is job No. 1. That takes precedence over all other things. And sometimes it leads to turnover. I'm sorry."

It was a year of unusual volatility among big banks' top executives, and the turnover at JPMorgan Chase could have been worse; despite presiding over the London Whale's $6.2 billion loss, Dimon at least got to keep his job. (The board on Wednesday cut his pay package in half, but still left him with $11.5 million.)

At smaller rival Citigroup (NYSE:C), the board abruptly replaced CEO Vikram Pandit in October, months after regulators rejected the bank's request to return capital to shareholders. Last week, successor Michael Corbat unveiled an extensive — and exclusively male — list of promotions and executive changes at Citigroup, in an effort to retain senior leaders while putting his own mark on the bank.

At JPMorgan, Dimon has spent much of the past year trying to convince board members, shareholders and regulators that the bank has cleaned up the lapses that led to the trading losses. In an internal report released Wednesday, a task force concluded that the London Whale affair "has caused substantial and healthy introspection at the firm and recognition of the need for continued improvement in multiple areas. Ultimately, the task force believes that this incident teaches a number of important lessons that the firm is taking very seriously."

In a separate statement, the board heaped both blame and praise on Dimon for his role in the losses and their cleanup.

"As Chief Executive Officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses in CIO and has accepted responsibility for such failures. Importantly, once Mr. Dimon became aware of the seriousness of the issues presented by CIO, he responded forcefully by directing a thorough review and an extensive program of remediation," the board said.