Banking

Dimon’s big pay package gets thumbs-down from JPMorgan shareholders

JPMorgan Chase’s shareholders voiced strong discontent Tuesday with the company’s most recent executive compensation packages, which included a one-time award of $52.6 million in stock options to Chairman and CEO Jamie Dimon.

At the company’s annual meeting, only about 31% of shareholders voted for a nonbinding “say-on-pay” resolution in support of the 2021 pay packages for Dimon and other named executive officers, according to preliminary results. That’s down significantly from last year, when 90% of shareholders voted in favor of the bank’s 2020 pay packages.

The vote came after two large advisory firms, Glass Lewis and Institutional Shareholder Services, recommended that shareholders reject the bank’s advisory resolution on pay.

JPMorgan Chase Chairman and CEO Jamie Dimon received a one-time award of $52.6 million in stock options last year, which was designed to keep him on the job for five more years.

Bloomberg

In an April 27 paper, Glass Lewis characterized the one-time grants to Dimon and Chief Operating Officer Daniel Pinto, who last year received $27.7 million in option awards, as “excessive.”

Glass Lewis urged shareholders at the nation’s largest bank by assets to “consider the company’s sustained disconnect between executive pay and performance over the last nine years.”

While JPMorgan’s size compared with peers “has helped to mitigate” some concerns about that disconnect, “the relative size of the company cannot fully mitigate concerns,” Glass Lewis wrote.

After Tuesday’s vote, a JPMorgan spokesperson defended the company’s decision to grant the special award, which was designed to keep its 66-year-old CEO on the job for five more years. The company spokesperson pointed out that the stock options won’t vest for five years and noted that Dimon won’t be allowed to sell any vested shares for an additional five years.

The award, which was granted last July, was “extremely rare,” the JPMorgan spokesperson said. It was Dimon’s first such award in more than 10 years, and reflected his “exemplary leadership” while also serving as an “additional incentive for a successful leadership transition” in the future, the spokesperson said.

Shaun Bisman, a principal at the consulting firm Compensation Advisory Partners, said there are several reasons why JPMorgan’s say-on-pay resolution failed to garner more support.

In addition to the negative recommendations by Glass Lewis and ISS, the awards for both Dimon and Pinto were not tied to the bank’s performance, Bisman noted in an email.

What’s more, JPMorgan’s one-year total shareholder return lagged that of the S&P 500, Bisman said. And on top of the retention awards, Dimon received a 10% year-over-year increase in his total compensation package for 2021, while Pinto received a 14% increase, he noted.

Dimon, who has been JPMorgan’s top executive since 2006, was the highest-paid U.S. commercial banking CEO last year, receiving a compensation package worth $34.5 million.

Earlier this year, shareholders at other U.S. megabanks easily approved say-on-pay resolutions. Bank of America’s resolution received 94% support from shareholders. At Citigroup, a comparable measure got 80% support, and Wells Fargo’s version garnered 73% support.



Most Related Links :
honestcolumnist Governmental News Finance News

Source link

Back to top button