Bloomberg News

JPMorgan Cuts Stock Payouts 15% for Top Managers as Value Slips

January 23, 2012

Jan. 23 (Bloomberg) -- JPMorgan Chase & Co., the biggest and most profitable U.S. bank, cut the stock awarded to Chief Executive Officer Jamie Dimon’s operating committee 15 percent as the value of the firm’s shares fell.

Dimon’s top 13 executives collected $60.9 million in restricted shares plus stock options for their performance in 2011, according to regulatory filings. That compares with $71.4 million of stock granted to 14 people who served on the committee in 2010.

The restricted stock averaged $4.7 million per executive as of the Jan. 18 award date, compared with $5.1 million a year earlier when New York-based JPMorgan’s shares were higher.

The reductions show JPMorgan’s top managers aren’t immune from pay cuts being felt across Wall Street, said Frank Glassner, chief executive officer of Veritas Executive Compensation Consultants in San Francisco.

Morgan Stanley is cutting pay for senior investment bankers and traders an average of 20 percent to 30 percent, people with knowledge of the decision said last week. Goldman Sachs Group Inc. reduced its compensation and benefits expense 21 percent to $12.2 billion in 2011 as revenue slid 26 percent.

JPMorgan fell 22 percent in 2011, outperforming the 25 percent decline in the KBW Bank Index. Goldman Sachs and Morgan Stanley, both based in New York, dropped more than 40 percent.

Dimon, whose 2011 pay held steady at about $23 million, shrank the size of his operating committee by one as Jay Mandelbaum and Heidi Miller stepped down to pursue other interests. Charlie Scharf, the former retail division CEO, was removed in June when his duties were reassigned and he was transferred to the private-equity unit.

Petno, Hogan

Doug Petno, who now runs commercial banking, and John Hogan, Dimon’s new chief risk officer, joined the committee when they were promoted.

JPMorgan’s board increased restricted shares awarded to the committee to 1.71 million from 1.63 million in 2010 and boosted options to 2.05 million from 1.62 million, filings show.

Restricted shares encourage executives to stay at a firm while minimizing the chances of their compensation being wiped out, Glassner said. Options, which let executives buy shares at pre-set prices, are riskier because they can lose all value if the stock falls.

The following table shows stock awards for Dimon’s current operating committee and the value of their restricted stock based on the average price on the dates the grants were made.

--Editors: Peter Eichenbaum, Sylvia Wier

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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