JPMorgan Chase & Co. (JPM:US) clawed back more than $100 million in pay from managers responsible for its record trading loss last year and awarded Chief Executive Officer Jamie Dimon less than three of his top lieutenants.
Mary Erdoes, Daniel Pinto and Matthew Zames each received more in total compensation than Dimon for 2012 after the board of directors halved the CEO’s pay for failing to supervise the unit that generated the so-called London Whale trading loss.
At the same time, the board again backed Dimon, 57, in his dual roles as chairman and CEO. Calls for Dimon to give up the chairmanship have been building since the bank disclosed more than $6.2 billion in losses on derivatives trades and failures in risk controls last year.
“The board has determined that the most effective leadership model for the firm currently is that Mr. Dimon serves as both,” the panel said yesterday in a proxy filing, advising shareholders to reject a proposal to split the roles.
A Senate investigation found last week that JPMorgan and its CEO dodged regulators and misled investors as losses escalated on the “monstrous” bet in London. The bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, investigators found.
The bank’s shares rose 0.9 percent to $48.78 yesterday in New York and have advanced 11 percent this year (JPM:US).
The board cited the debacle while cutting Dimon’s 2012 compensation to $11.5 million from $23 million the previous year. It also credited his “leadership and management abilities” for the lender’s performance (JPM:US). The bank, the largest in the U.S., with $2.4 trillion in assets, posted its third straight year of record profits in 2012 with $21.3 billion in net income.
Zames, 42, and Pinto, 50, who helped clean up the trading mess, were the bank’s highest-paid executives, with each getting $17 million, the proxy shows.
Zames, elevated to co-chief operating officer after overhauling the chief investment office last year, “demonstrated leadership and risk-management discipline,” the board said. His pay included a cash bonus of $6.1 million and $9.2 million of restricted stock.
Pinto, also promoted after helping unwind the faulty trades, got a $8.1 million cash bonus and $7.1 million in restricted stock. He is co-CEO of the corporate & investment bank with Mike Cavanagh.
Erdoes, CEO of asset management, received $15 million in total compensation, including a $4.9 million cash bonus and $7.4 million of restricted stock.
Ted Dimon, the CEO’s 82-year-old father and a broker at the firm, more than tripled his compensation in 2012 to $1.6 million from $447,000 in 2011, the company’s proxy filings show.
Total compensation for former Chief Financial Officer Doug Braunstein, 52, who is now a vice chairman at the firm, fell by about half from $9.5 million in 2011 to $5 million last year.
JPMorgan said it “invoked comprehensive clawbacks of previously granted outstanding awards and/or repayment of previously vested awards” from the people responsible for the trading loss.
A group of retirement plans, including the AFSCME Employees pension fund, is pressing to separate Dimon’s dual roles. The fund said last month its views reflect “mounting investor concerns with the board’s oversight in the wake of the London Whale losses, recent regulatory sanctions and its failure to fully demonstrate that it can manage the size and complexity of its balance sheet.”
The Federal Reserve and Office of the Comptroller of the Currency censured JPMorgan in January over failures in risk controls for the London derivatives trades as well as for lapses in its anti-money laundering practices.
A shareholder proposal to appoint an independent chairman failed with 40 percent of the vote last year. Glass Lewis & Co., a corporate governance advisory firm that backed the plan, said an independent chairman is “better able to oversee the executives of a company and set a pro-shareholder agenda without the management conflicts that a CEO or other executive insiders often face.”
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