James Dimon's employment agreement with Chicago-based Bank One Corp., disclosed for the first time on Monday, include several provisions that would allow Mr. Dimon to capitalize on appreciation to Bank One's stock price, including one that would reward him in the event of a sale.
Details of Mr. Dimon's compensation package, laden with stock-option incentives, were released in Bank One's 10-Q filing with the Securities and Exchange Commission. The former Citigroup Inc. executive will receive a base salary of $1 million a year over the next five years, according to his compensation agreement. Mr. Dimon will also receive a $2.5 million bonus this year. Beyond the salary and 2000 bonus, his future bonus could range from zero to 400% of his base salary, depending on the performance of the company.
In his last job, as president of Citigroup in 1998, Mr. Dimon was paid a salary of $650,000 and a bonus of $4.3 million. He left Citi in the fall of that year.
The contract with Bank One includes a 12-month noncompete agreement and a 12-month nonsolicit agreement in the event Mr. Dimon leaves the company. When he left Citigroup, Mr. Dimon signed much longer noncompete and nonsolicit agreements.
Along with his pay and bonus, Mr. Dimon's current package includes 35,242 shares of restricted shares of Bank One stock. He'll have access to 20% of those shares each year over the next five years.
Mr. Dimon also has 10-year options on 3.24 million shares, available at a price of $28.375 per share. Certain blocks of those shares have an accelerated vesting if Bank One's stock reaches a certain value.
The first set of 1.24 million shares will vest at 20% each year over the next five years. A second set of one million shares will vest at the same rate unless Bank One's stock price reaches $50 or more per share. If the stock reaches the level before the end of the vesting period Mr. Dimon will become immediately vested for that set of shares. The same is true for another set of one million shares, with the only difference being a stock price target of $60 per share.
The package also includes a clause under which all Mr. Dimon's options are vested should the company experience a "change of control." Mr. Dimon has stated previously that seeking a sale of Bank One was not one of his intentions.
Bank One's former CEO John B. McCoy in 1998 was paid a base of $995,000 with a $2.2 million bonus.
Last year Mr. McCoy received $1.15 million but no bonus.
Verne Istock, who was interim CEO last year, earned $949,000. The bank has extended stock options to Mr. McCoy and Mr. Istock as well as other executives in the past, but not with the accelerated-vesting clause like Mr. Dimon will have access to, said Tom Kelly, a Bank One spokesman.