In case you didn’t know, Jamie Dimon is getting a pay rise for 2013. This is coming despite JPMorgan’s $20bn in fines and penalties for 2013 and despite the fact that all other JPM staff are reportedly having their pay held static to help cover the fines. So, what makes Jamie so deserving? Well…
1. The share price is at a record high
JPMorgan’s share price has risen 20% since January 2013. Following a peak of 58.49 in January, it’s now 56.17 – higher than at any other time in the last five years.
2. JPMorgan is being unfairly persecuted and Jamie Dimon has had to bear the brunt of that
The New York Times says that a ‘vocal minority’ of JPMorgan’s directors wanted Jamie Dimon to be paid less and took time out to ‘pace up and down’ the corridor when it became clear they were going to be over-ruled. They were out-shouted by a more vocal majority who thought that Dimon needs to be compensated for taking the bank through a difficult time. There’s also a feeling that JPMorgan has been unfairly persecuted and that Dimon, as its figurehead, has been unreasonably vilified.
3. Even after those fines, JPMorgan’s return on equity was a sort-of-ok 9%
Ok, JPMorgan’s return on equity fell from 11% to 9% last year, but that’s still not so bad when you consider that Morgan Stanley’s return on equity was 5% and that James Gorman has just had his deferred stock bonus increased 86% year-on-year.
4. He had his pay halved in 2012
Around this time last year, Dimon had his pay slashed by 50%. In 2011 he was paid $23.1m. In 2012 he was paid $11.5m. That cut was in response to the so-called ‘London Whale’ trading loss, which is now fading into the distantish past.
5. JPMorgan is still incredibly profitable
Even after all those fines, JPMorgan still made a total of $17.9bn in profit last year. Ok, that was down from $21.2bn in 2012, but the bank was very, very comfortably in the black.
6. He’s reined-in risk taking
JPMorgan looks like a far less risky place than previously. Value at Risk (VaR) across the bank was reduced by 66% year-on-year in 2013 and in the chief investment office which was ground zero for the Whale loss, it was cut by 93%. To cut risk so dramatically without hammering profits, whilst carrying a giant regulatory fine, is quite a feat.
7. Compensation is integral to his personality
Where would Jamie Dimon be without an out-sized pay package? In February 2013, he pointed out to analyst Mike Mayo (a persistent critic) that he was ‘richer than him.’
8. He’s paying a lot in tax
Dimon’s win is also the American government’s boon. When Warren Buffett complained about only paying 17% tax, Dimon said he was paying 39.6% and would be willing to pay 50% to, “lift up the poor, the impoverished, the inner-city school kids.”
9. JPMorgan bankers love him
Dimon is JPMorgan’s figurehead. Where would the bank be without him? He has also handily dispensed with all other pretenders to the throne.
10. It could have been far worse
Dimon was in charge of negotiating JPM’s $20bn in fines. Without him, it may have been even higher still. Worse, JPM could have faced criminal charges. Jamie stopped that.