J.P. Morgan had a rough year in 2013, but you'd never know that from looking at CEO Jamie Dimon's pay package. The bank's board of directors just approved a 74 percent raise for Dimon.
The New York Times first reported J.P. Morgan's board of directors have voted to increase Dimon's 2013 pay package to about $20 million. That's up from the $11.5 million Dimon received during 2012.
It's worth noting Dimon suffered a significant pay cut — down from $23 million — in 2012. That after the "London Whale" trading fiasco cost J.P. Morgan about $6 billion and forced Dimon to face some uncomfortable questions from Congress. (Via C-SPAN, Time)
Dimon's raise puts his compensation back at pre-2012 levels. But a writer for Business Insider points out J.P. Morgan had an even worse year in 2013, thanks to a bevy of fines imposed by the Justice Department.
"There was the $410 million that the bank paid for manipulating electricity markets. There was the $1.7 billion fine JP Morgan paid for failing to do its due diligence with Ponzi schemer Bernie Madoff's accounts. ... And of course the $13 billion the bank paid out to take care of charges of mortgage fraud dating back to the financial crisis."
Now, the bank still did end the year in the black, averaging about $5.7 billion a quarter. But Dimon's substantial raise has sparked a lot controversy in financial circles about whether the CEO deserves his pay package. Take this little exchange on CNBC:
Jim Kramer: "This one just didn't sit right. It didn't sit right."
David Faber: "Think of everything he had to go through. All the negotiations that he dealt with the Justice Department on."
Kramer: "Well, then give him a psychiatrist or something, I don't know. I mean, it just seems like a lot of money."
A lot of money indeed, and a MarketWatch writer says that money is essentially rewarding Dimon for his bank's legal troubles. "That Dimon would be able to reap a reward for that sort of performance underscores just how empty Wall Street's promises [were] about how pay would be tied to performance."
But AlJazeera's Ali Veshi says Dimon's defenders claim the CEO's leadership and negotiations with the Justice Department helped save J.P. Morgan from facing even more catastrophic repercussions, like a court battle.
"Others might say, 'Wow, you got us out of that. We're not in lawsuits, we're kind of through most of this. And under J.P. Morgan's solid leadership J.P. Morgan Chase made it through, and as a result let's reward him.'"
And a writer for Bloomberg points out J.P. Morgan was probably just trying to make sure Dimon stuck around — his raise puts him back on par with other big bank CEOs.
"The going rate for the top firms seems to be $10 to $30 million. ... Dimon got paid toward the bottom end of that range last year and so I guess he was due for a raise to something more in the middle. Fines or no fines, the reasoning might be as simple as that."
According to the bank's SEC filing, Dimon's compensation will come in the form of $18.5 million worth of restricted stock units, vested over 3 years. The CEO's base salary of $1.5 million is unchanged.
