After agreeing to pay $23 billion in penalties and settlements in 2013, JPMorgan Chase (JPM) Chief Executive Jamie Dimon was rewarded today by the board he chairs, receiving a 74 percent pay raise to $20 million.
Dimon has presided over a series of costly settlements with government investigators, including paying $13 billion for mortgage activity that helped lead to the financial crisis and $2 billion for failing to do anything about signs that client Bernie Madoff was running a Ponzi scheme. But in the amoral logic of the stock market, each payout has been met with gains in the company’s stock price, as investors see one fewer uncertainty looming over future profits.
Here’s a key point: That stock performance matters more to Dimon than headline pay figures. He’s sitting on a third of a billion dollars in JPMorgan shares. The shares he held at the beginning of 2013 increased almost $80 million over the course of the year—four times the official compensation announced today. He made more in one day, Nov. 8, than his entire 2012 salary of $11.5 million—which represented a 50 percent cut from 2011 as a rebuke for his oversight of a reckless multibillion-dollar trading loss at the bank’s London office. Even when the bank loses, Dimon gains.
The raise Dimon is getting, $8.5 million, isn’t meaningless. It’s a lot of money for anyone! (The total includes salary, stock, and the value of stuff like plane use.) But it’s so little compared with his holdings—on three out of four trading days last year, Dimon’s shares swung by more than $1 million—that the award has to be interpreted politically. That is, in terms of the message it sends to the strapped-for-cash regulators he meets with, who know JPMorgan is too big to prosecute; to his CEO peers, who can only look on with envy at the thrall in which he keeps his board; and to his staff, who learn that the consequence of breaking the law and making money at the same time is bigger rewards.
On making money: JPMorgan is making less of it. The bank posted its first loss of Dimon’s tenure in October, and in January, when the 2013 fiscal year was tallied up, JPMorgan ceded the title of most profitable bank to Wells Fargo, which earned $21.9 billion to JPMorgan’s $17.9 billion.
That’s the sort of thing JPMorgan’s board is supposed to care about. If unprecedented wrongdoing isn’t enough to cancel a raise, and falling behind in the biggest league table of all isn’t either, it’s difficult to imagine what behavior would ever knock Jamie Dimon out of the position of chairman and CEO of JPMorgan Chase. Dimon already has a penchant for rubbing his status in other people’s faces—like wearing presidential cuff links to a congressional scolding, and dismissing a research analyst’s question with a curt “That’s why I’m richer than you.” The raise Dimon got today reminds us that will continue to be the case indefinitely.