LOS ANGELES, Calif. – JPMorgan Chase & Co. Chairman and CEO Jamie Dimon’s total compensation fell 37 per cent last year to $11.8 million as the nation’s largest investment bank grappled with billions in legal costs and fines.
Dimon’s total compensation fell from $18.7 million in 2012, according to regulatory documents filed by the bank Wednesday.
JPMorgan’s committee on executive compensation noted in the filing that it adjusted all of the top company officers’ pay levels to account for the impact the fines and settlements had on the lender’s financial results.
Last year, JP Morgan was hit legal costs and fines stemming from the housing crisis and its $6 billion “London Whale” trading loss. The financial hurdles contributed to a 16 per cent decline in net income for the year.
Even so, the panel also praised Dimon for playing a key role in resolving the various legal issues that confronted the bank, noting that JPMorgan’s lines of business achieved “strong underlying results, notwithstanding legal and regulatory challenges.”
It also noted that the company generated 37 per cent return to shareholders for the year, while outperforming the financial services industry over a three and five-year period.
Dimon, 58, has led the New York bank as president and CEO since Dec. 31, 2005. He was appointed chairman the following year.
His 2013 compensation included $1.5 million in salary, unchanged from a year earlier, and stock awards worth $10 million. That’s down from $12 million in stock awards a year earlier, when he also received options of $5 million. For 2013, Dimon didn’t receive any option awards. He also didn’t receive a cash bonus.
Dimon did get a boost in other compensation, namely company costs to provide him with personal use of corporate aircraft ($125,973); personal use of cars ($31,041); and residential and related security ($134,728), among other perks.
All told, Dimon’s other compensation jumped 72 per cent to $291,833.
Like many large banks, JPMorgan has been struggling to resolve legal troubles stemming from the mortgage market meltdown that signalled the end of the last housing boom in 2007.
Legal costs weighed on the company’s earnings all year long. In the third quarter, the bank set aside $9.2 billion to cover a string of litigation stemming from the housing crisis and the bank’s “London Whale” trading debacle. The legal expenses caused the bank to report a quarterly loss for the first time in a decade.
For 2013, the company reported net income of $17.9 billion, or $4.35 per share. That was down from $21.3 billion, or $5.20 per share, the year before. Revenue for 2013 was flat at $99.8 billion.
JPMorgan shares ended regular trading up 42 cents at $59.27 on Wednesday. The stock was up 3 cents in extended trading. Shares are up 1.4 per cent this year. The stock is has ranged from $46.05 to $61.48 the past 52 weeks.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.