Does JPMorgan CEO deserve $20 million salary?

After a year of lawsuits, fines, and government probes, the bank is giving Jamie Dimon an enormous pay hike.

By The Week Jan 31, 2014 2:58PM

Credit: © Chris Ratcliffe/Bloomberg via Getty Images

Caption: James 'Jamie' Dimon, chief executive officer of JPMorgan Chase & Co.,"This says everything" about Wall Street's priorities, said Linette Lopez at Business Insider.


After "a tumultuous year of embarrassing lawsuits," fines, and government probes, JPMorgan is giving CEO Jamie Dimon (pictured) a massive raise to $20 million for 2013.


Never mind the more than $20 billion in settlements the bank paid out last year, related to mortgage fraud, Bernie Madoff's Ponzi scheme, market manipulation, and other scandals.


The JPMorgan board slashed Dimon's 2012 pay -- to $11.5 million -- when a London trader "blew a $6.2 billion hole in the bank's balance sheet by trading JPM's extra cash."


Then, the board's message seemed clear: "Mess with the bank's money, you're toast." Its departure from that line now "sends a worrying message about what really matters to Wall Street." Here's a hint: It's not the customers.


Dimon deserves every penny, said Francesco Guerrera at The Wall Street Journal. "Once the litigation costs are stripped out," JPMorgan fared pretty well in 2013. The bank insists that it inherited many of its troubles when it purchased Washington Mutual and Bear Stearns -- at the government's urging.


That doesn't let Dimon off the hook, of course: "Notwithstanding government pressure," it was ultimately his call "to buy those companies, legal liabilities and all."


Now Dimon will need to prove his worth anew, and shareholders and directors are expecting the bank to have "a much cleaner 2014, without outside noise overshadowing its results." It still has to convince investors that the board isn't, as one labor union representative put it, "prisoner to the cult of Jamie."


That, not the dollar figure, is "the important question," said Adam Hartung at Forbes. Dimon may be a "media darling," but his aggressive, "take no prisoners" reputation has set an unhealthy tone at JPMorgan.


The bank would clearly benefit from separating the roles of CEO and chairman, yet Dimon "has stopped this from happening." Employees, customers, and investors should take note, regardless of the bank's stock price. "That Dimon received such an undeserved raise simply points to much bigger problems in governance -- and raises questions about" the bank's future.


But how much is Jamie Dimon really worth? asked Matt Levine at Bloomberg. That is a "pretty profound" question for the board and stockholders, and far from an easy one. Fines and fraud settlements, after all, may just be "a cost of doing business as a global bank."


There's no simple way to compute the actual dollar value of what Dimon does. CEOs, unlike traders with gains or losses, rarely "generate a lot of individual statistics." Without objective metrics to measure an employee's value, boards "fall back on market comps."


And in that respect, Dimon's pay doesn't seem out of line. For top firms, the going rate is between $10 million and $30 million.


"Dimon got paid toward the bottom end of that range last year," Levine writes, so maybe "he was due for a raise to something more in the middle. Fines or no fines, the reasoning might be as simple as that."


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Tags: BACCJPM
154Comments
Jan 31, 2014 3:42PM
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Seems a bit strange that most JPM employees were denied a bonus because it was such a bad year, yet Jamie gets a 74% raise because it was such a good year... 
Jan 31, 2014 3:41PM
Jan 31, 2014 3:55PM
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OK if the ******** cured all forms of cancer and perfected a process to produce endless energy from water for 10 cents a gallon, and then made every person on earth happy, healthy and wise, and he wrote and sang at least 10 sgt Peppers quality songs, then maybe. But for running a stupid government backed bank. Hell NO!

Jan 31, 2014 4:32PM
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I thought about it, $20 mil, FINE, tax him 90% and I'm good with it.
Jan 31, 2014 3:38PM
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does anyone not think civil war is  not justified
Jan 31, 2014 4:30PM
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WTF? Really? REALLY!!! He should be somebody's BITCH in prison. 
Jan 31, 2014 4:46PM
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"Does JPMorgan CEO deserve $20 million salary"?

Hell no
Jan 31, 2014 4:57PM
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I am unemployed and to see these CEO making $20 million what a waste. Think about how many people they could employ for that money. The CEO should not make more than $550000.00 a year that includes bonuses. All I want to make is a simple $25,000 a year and I have two degrees. I am willing to work hard for that income. Yet I am unable to find any job that also has benefits. Mostly Medical. My last job I had perfect attendance.. All I would like is to be given a chance at a job , but being 50 years old the corporate places wants those 20 something college students. I say lets pull your money out of these big banks and into credit unions and show them no more bonuses for these big bank CEO and financial institutions. 
Jan 31, 2014 4:50PM
Jan 31, 2014 4:46PM
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Lets see if someone wakes up out there in dreamland.  The board of most major corporations are also the major shareholders.  They are on the board BECAUSE they are the major shareholders and because they want to be paid for being the major shareholders.  Their salaries come from corporate profit.  They pay the CEOs these enormous sums because these CEOs make the major shareholders lots of money. And this is precisely the reason that the minor shareholders get squat while these big corporations sell overpriced crap to the consumer.  The major shareholders control the profits and they want the lions share for themselves, that is why board members get a salary.  The consumers get robbed.  The minor shareholders get robbed.  If you do not want to get robbed, stop doing business with these companies.  It is really that simple. JPMorgan only survives because a lot of minor shareholders and minor investors (read: middle class America) still give them money.  What did you think they were going to do with your money - put it to work for YOU?  Help YOU to make more?  GMAFB
Jan 31, 2014 4:39PM
Jan 31, 2014 4:47PM
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I wonder how much of that $20M will go back into the economy.  Or is it all going back into making him even wealthier, with no effort, other than the "givt of the gab."  Oh!  I know.  It's going into hidden accounts that can dole out money, secretly, to his favorite lobbying group or politicians.
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How many employees will they have to lay off to afford the raise. Plus we all know hell get another big pay out even if he does get fired
Jan 31, 2014 3:46PM
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NO he isn’t worth that no one is and only an egotistical Moron would think for a minute that they are and what ever success they had to think that they did it on their own. He will be worth that when he runs everything in the company all by himself. Obviously he is a Republican.

Jan 31, 2014 4:39PM
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Cutting your pay to $11.5 million is not "toast".
Jan 31, 2014 3:38PM
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Does he really? 

BWAHAHAHAHAHAHAHAHAHA
HAHAHAHAHahahahahahahh.

Need we go on?

Jan 31, 2014 3:18PM
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Does the head of La Cosa Nostra deserve $20 million a year - it all depends on your prospective!
Jan 31, 2014 4:50PM
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Where this money needs to go is in chip-encoded credit and debit cards and do it  IMMEDIATELY,   not fall 2015.  If the banks show that it is money well spent, retailers will get on board with newer POS machines.  Then, and only then, will consumers  feel a little safer from hackers and more open to the  ridiculous salaries for CEOs who thumb their noses at consumers.
Jan 31, 2014 4:49PM
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no ceo ever deserves 20 million. 1 million should at the very most be allowed to anyone just doing their job.
Jan 31, 2014 4:51PM
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This guy does not deserve that kind of money. But than again, does a **** like A-Rod deserve 10s of millions of dollars a year to play a freekin game? NOOOO.
There is something wrong with our priorities. This guy is smart. and he runs a stressful business, and deserves a good pay day. Athletes (most) work hard, and do deserve good pay. But lets pay our Teachers, our Nurses, Health Care professionals, EMTs, Firefighters, and all first responers, and most of all, our Soldier better. (Doctors seem to do OK as is) but the others need to be paid more.


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