Jamie Dimon’s pay reign may not last long
By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Jamie Dimon now occupies one of the most dubious spots in banking: he’s the highest-paid chief executive on Wall Street. It would have been the case anyway had JPMorgan’s board simply matched his bonus from last year. But a 20 percent hike, along with his $1 million salary, takes his total 2010 pay to $18 million — and he may yet get some cash on top. That’s more than the $13.2 million granted to Goldman Sachs CEO Lloyd Blankfein, or the nearly $10 million pocketed by BofA boss Brian Moynihan.
JPMorgan, at least, can make a good fist of defending Dimon’s pay. The bank has put up a solid performance throughout the crisis, and net profit increased last year by an impressive 48 percent. Goldman’s, meanwhile, decreased by a third and the firm coughed up $550 million to settle accusations of fraud by the Securities and Exchange Commission. Yet Blankfein’s bonus nevertheless jumped by 42 percent.
Still, the hike in Dimon’s payout looks a tad generous. After all, the earnings boost relied entirely on lower provisions for credit losses; income before deducting the provisions actually fell 14 percent. What’s more, JPMorgan’s stock ended 2010 up less than 2 percent, on par with some peers but badly lagging the broader market.
In Dimon’s defense, as losses mounted earlier in the crisis, he went without any bonus in 2008 and took no cash reward in 2009. So there may be an argument for recompensing him for credit costs now being lower than expected. Although the shares have had a nice start this year and there’s the hopeful prospect of a dividend, it still means Dimon receives his spoils before shareholders do.
If the JPMorgan boss is at all concerned his position as the industry’s top money man will make him the lightning rod for criticism of banking excess, he shouldn’t worry for long. He still made less than Wells Fargo CEO John Stumpf did last year. Stumpf squirreled away a $21 million bonanza after the board saw fit to double his bonus. With Wells Fargo’s shares having gained a healthy 15 percent last year, he stands to trump his Wall Street counterparts again.