Meet The People who Gave JPMorgan’s Jamie Dimon An $eight.5 Million Elevate
On Friday, the board of administrators of JPMorgan Chase voted to give CEO Jamie Dimon a elevate. Not only a price-of-residing improve, however almost a doubling of his compensation. In Dimon’s case, this means his compensation jumped from $11.5 million to $20 million.
Since 2013 was not an important year for the financial institution, the choice raised some heckles among Wall Avenue watchers, reflected in the headlines in the brand new York Instances (“Huge Increase for JPMorgan’s Dimon Regardless of a Tough Yr”), the Washington Put up (“JPMorgan provides CEO Jamie Dimon 74 % raise despite financial institution’s legal troubles”), Business Week (“Dimon Will get 74 P.c Elevate After Billions in Fines”), Forbes (“Jamie Dimon’s Undeserved Pay Increase Indicates an Ineffective JPMC Board”), and the Wall Road Journal (“Dimon Gets Elevate After Rough 12 months”).
Final yr the federal government fined the bank $20 billion for illegal activity, together with a $13 billion settlement over its sale of mortgage-backed securities that contributed to the monetary disaster and one other $2 billion settlement over accusations that the financial institution didn’t report indicators of fraud surrounding Bernard Madoff’s Ponzi scheme. It also laid off 7,500 workers and announced that it won’t be giving its workers raises on account of the fines.
To ordinary Americans — especially these who have seen their wages and normal of residing stagnate or decline over the previous decade — Dimon’s compensation, even earlier than the brand new raise, appears to be like extravagant. This is particularly true of a CEO whose bank took $25 billion in bailout funds from taxpayers in 2008 (below the Troubled Asset Relief Program) to rescue JPMorgan from collapse.
However enterprise college professors and other corporate watchdogs recognize that there is usually little connection between a company’s efficiency and the CEO’s wage and bonuses. This is because decisions about CEO compensation are made by fellow board members who stay in a rarified world the place multi-million dollar salaries are taken without any consideration and where they typically blame a company’s poor performance on forces exterior the CEO’s management.
In keeping with the brand new York Times, the JPMorgan board was cut up over whether or not, or how much, to extend Dimon’s compensation. What the Occasions described as a “vocal minority” of directors didn’t want to present Dimon a elevate at all, while other directors argued that he deserved a pay enhance as a reward for main the financial institution by a difficult interval. Refining Regardless of steep authorized charges, the financial institution earned $17.9 billion in income final 12 months, while its stock value increased 22 %.
The fines and settlements put Dimon, and the financial institution, in the national highlight, contributing to his reputation as a typical Wall Street tycoon. But Dimon used his beauty, charisma and political connections to soften the blow. Final September, right earlier than the Justice Division was about to announce civil charges in opposition to JPMorgan over its risky mortgage investments, Dimon organized a gathering with Lawyer Basic Eric Holder, which led to the brokered settlement as a substitute of a federal lawsuit. A few months later, Dimon met with Preet Bharara, the U.S. Legal professional in Manhattan, which may have helped reduce JPMorgan’s effective within the Madoff case.
The upper tier of America’s enterprise elite is a small circle. Fewer than 20,000 individuals sit on the boards of the largest banks and the Fortune 500 corporations, each of which usually has between 10 and 25 administrators. Many of these people are a part of an online of overlapping memberships on the same company boards in addition to foundations, assume tanks, charities, hospitals, universities, and company foyer groups. This doesn’t suggest all of them suppose alike. Most are Republicans, however some are Democrats. They embrace liberals and conservatives, individuals who devote a lot of their time to philanthropy and others who hoard their fortunes, individuals who give heaps of money and advice to political candidates and people whose political engagement is limited to voting and paying lobbyists to look out for his or her company interests.
Dimon is on the pinnacle of America’s company ruling class. After graduating from Harvard Business School in 1982, he went to work at American Express as an assistant to CEO Sandy Weill. Dimon’s father, who worked at American Specific, brought his son to Weill’s consideration. The younger Dimon went on to high-level jobs at Citigroup and Travelers before turning into CEO of Bank One, the nation’s fifth largest financial institution, in 2000. When JPMorgan Chase purchased Bank One in 2004, Dimon grew to become president and chief working officer of the bigger company, was named its CEO in 2005, and added the title of chairman of the board the following year.
Dimon’s political influence is strengthened by his personal, his firm’s, his board members’, and his business’s political actions. Since the nineteen nineties, Dimon has personally contributed more than $550,000 to each Republican and Democratic candidates for Congress as well as to JPMorgan’s own political motion committee, in line with the middle for Responsive Politics. Since 1990, JPMorgan workers have contributed over $34 million in marketing campaign contributions. Since 1999, the financial institution has invested over $eighty million in lobbying. In 2012 alone, JPMorgan workers donated $5 million in marketing campaign contributions (sixty three % to Republicans) whereas the bank spent over $8 million for lobbying.
Certainly, JPMorgan is probably the most influential and connected firms in the country, so it should be no surprise that its board of directors — the people who voted to provide Dimon a giant elevate — embrace people who are deeply enmeshed in the overlapping web of elite affiliations and whose views of what constitutes cheap compensation would seem outrageous to many individuals exterior the world of the .001 p.c.
So let’s sneak a peek contained in the JPMorgan board room to see who was sitting on the desk when Dimon received his increase.
William C. Weldon, 64, retired as CEO of Johnson & Johnson, the health care products behemoth, in 2012. The corporate paid Weldon $26.Eight million in total compensation in 2011. He is been on the JPMorgan board since 2005 and, like the opposite 9 directors, he will get $245,000 a 12 months to serve on the board. He can be on the board of CVS Caremark Corporation, whose board gave its CEO Larry Merlo, a 44 p.c pay enhance final yr to $20.Three million. Weldon is a director of the U.S.-China Business Council, a member of the Healthcare Management Council (a business foyer group) and a member of the board of Quinnipiac University, his alma mater. He’s the previous chairman of the Pharmaceutical Research and Manufacturers of America, the powerful drug trade lobby group. In 2011, the new York Occasions listed Weldon as one “The Worst C.E.O.’s of 2011” for the large number of Johnson & Johnson product recalls that yr. The Harvard Business Faculty makes use of Weldon’s expertise at Johnson and Johnson as a case examine of unethical company leadership. Regardless of these lapses, J&J rewarded Weldon with $143.5 million in retirement pay, in keeping with Business Week. Within the 2010-12 election cycle Weldon contributed $four,900 to Congressman Ben Quayle of Arizona, son of former Vice President Dan Quayle. The youthful Quayle, a Tea Occasion Republican, lost his bid for re-election in 2010. Weldon also contributed to the Republican National Committee and to Johnson & Johnson’s company PAC.
Stephen B. Burke, 54, is the CEO of NBCUniversal and Executive Vice President of Comcast Corporation, the tv and leisure conglomerate. His compensation in 2011 (the latest figures) was $23,654,837. He is served of JPMorgan’s board since 2004. He can also be on the board of Berkshire Hathaway, the investment agency headed by Warren Buffett, the nation’s second wealthiest individual, value over $fifty eight billion, according to Forbes journal. Burke is chairman of The Children’s Hospital of Philadelphia. Previous to joining NBCUniversal he was president of ABC Broadcasting, a division of the Walt Disney Firm. Through the 2012 election season Burke donated $1,000 to Mitt Romney, $10,000 to the Democratic Senatorial Campaign Committee, $15,000 to the Nationwide Cable and Telecommunications Affiliation (his industry’s lobbying arm), and $15,000 to Comcast’s personal political natural gas leak motion committee. In 2010 he contributed another $14,a hundred and twenty to the Democratic Senatorial Marketing campaign Committee in addition to $7,500 to the Nationwide Republican Senatorial Committee. He donated to the campaigns of Democratic Senator Arlen Specter of Pennsylviana and his Republican opponent Pat Toomey, to Republicans Patrick Meehan, Robert Bennett, Jim Gerlach, and Eric Cantor, and to Democrats Blanche Lincoln and Wealthy Boucher.
Lee R. Raymond, seventy four, former CEO of ExxonMobil, has been on the JP Morgan board of directors since 2001. Raymond made headlines in 2006 when ExxonMobil handed him a retirement package worth a minimum of $398 million, considered one of the largest within the history of American business. In 2005, the yr earlier than he retired, ExxonMobil paid Raymond $19.9 million in salary, bonus and different incentives. Raymond spent his total career with the company, rising to CEO of Exxon in 1993 and then of Exxon-Mobil when the two companies merged in 1999 to kind the world’s largest and most powerful oil company. He served as chairman of the National Petroleum Council, one of the trade’s lobby groups. He can be a director of the Enterprise Council for Worldwide Understanding, a Trustee of the Wisconsin Alumni Analysis Basis, a Trustee of the Mayo Clinic, a member of the Innovations in Drugs Management Council of UT Southwestern Medical Heart, and a member of the Nationwide Academy of Engineering. In 2012 he donated $5,000 to Mitt Romney’s campaign and one other $7,500 to the National Republican Committee.
Michael A. Neal, fifty eight, joined the JPMorgan board on January three this yr, following his retirement as Vice Chairman of Basic Electric Company and CEO of GE Capital. He 2011 GE offered Neal with $17,305,855 in compensation. He serves as a member of the U.S. Advisory Board of the European Institute of Enterprise Administration, as a trustee of Fairfield College and the Georgia Tech Foundation, and as a director of Soundwaters, a camp in Stamford, Connecticut. Since 2010, he has contributed $30,800 to the Republican Nationwide Committee, $5,000 to Mitt Romney, $4,000 to Republican Scott Brown (in his face against challenger Elizabeth Warren), other funds to the campaigns of Republicans Rob Portman, Richard Shelby, Johnny Isakson, and David Camp as well as Democrats Bryan Georgiou, Chris Dodd, Jim Himes, Richard Neal, John Larson, Richard Blumenthal and Blanche Lincoln, and hundreds to GE’s own political action committee.
James A. Bell, sixty four, served as President, Chief Monetary Officer, and Govt Vice President of the Boeing Firm, the world’s largest aerospace firm and defense contractor, earlier than he retired in 2012. The previous 12 months Boeing paid him $7,066,327 in Ceramic cross complete compensation. A member of JPMorgan’s board since 2011, he additionally serves on the board of the Dow Chemical Firm, which pays CEO Andrew N Liveris $10.4 million He can be a board member of the Chicago City League and the Chicago Economic Membership.
Linda B. Bammann, 55, joined JPMorgan’s board last September. She had been the bank’s Deputy Head of Risk Management from July 2004 until her retirement in 2005, previous to which she had been Chief Danger Administration Officer at Bank One Company since 2001. From 1992 to 2000 she was a Managing Director with UBS Warburg and its predecessor companies. From 2009 and 2012, she served as a Director of Manufacturers Life Insurance Firm, which paid its CEO Donald A. Guloien $10.Four million in 2012. Bammann served as a Director of The Federal House Mortgage Mortgage Corporation (Freddie Mac) from 2008 until July 2013, earning $177,500 a year. In 2012 she donated $250 to the Nationwide Republican Congressional Committee.
Crandall C. Bowles, 65, is chairwoman of Springs Global, Inc. natural gas leak a privately-held producer of house textile merchandise, primarily based in Fort Mill, South Carolina, that is not required to disclose its high executives’ compensation. She has been on JPMorgan’s board since 2006. She is a director of Deere & Company, the massive producer of farm equipment, whose CEO, Samuel Allen, is paid $eight.Three million. Bowles beforehand served as a director of Hillshire Manufacturers Corporation (formerly known because the Sara Lee Company) from 2008 to 2012 and of the banking big Wachovia Company from 1991 to 1996. She serves on the boards of the American Textile Manufacturers Institute, The Business Council, The Enterprise Roundtable, the Palmetto Business Discussion board, South Carolina Local weather, Power and Commerce Advisory Committee, and the South Carolina Chapter of the Excellence in Education Council, all business foyer groups and corporate-backed coverage organizations. She’s on the board of the Brookings Establishment, the influential assume tank, and on the governing boards of the Packard Middle at Johns Hopkins, The Wilderness Society, and the African Wildlife Foundation. In 2012, Bowles contributed $5,000 to Obama’s re-election campaign and no less than $34,000 extra to other Democratic candidates and the Democratic Party. Her husband, Erskine Bowles, a wealthy financier, served as Bill Clinton’s chief of staff.
James S. Crown, fifty nine, joined his household’s agency, Henry Crown and Company, a privately-held investment and real estate firm, in 1985 and has served as its president since 2002. He has served on JPMorgan’s board since 2004. He is also a director of General Dynamics Company whose CEO Jay Johnson made $18 million before he retired in 2012, and whose successor, Phebe Novakovic, took house $6.4 million last 12 months. Crown served on the board of Sara Lee Corporation from 1998 to 2012 and of Banc One Corporation from 1991 to 2004, when it merged with JPMorgan. He is on the boards of the University of Chicago Medical Center, the Museum of Science and Industry, The Aspen Institute, the University of Chicago, and the Chicago Symphony Orchestra. Since 2009 he has contributed $173,720 to political campaigns, all but $2,500 of it to Democratic candidates and the Democratic Party.
Timothy P. Flynn, 56, retired in 2012 as chairman of KPMG International, the global accounting agency, which can be not required to disclose its executives’ compensation. He is been on the JPMorgan board since 2012. He additionally serves on the board of Walmart (which paid CEO Mike Duke $20.7 million earlier than he resigned last November) and the Chubb Company (which paid CEO John Finnegan $thirteen.9 billion). Flynn is on the board of trustees of the College of St. Thomas in St. Paul, Minnesota, his alma mater. He is a member of the Enterprise Roundtable, the elite corporate lobby group comprised of CEOs, and on the board of the Committee to Encourage Company Philanthropy. He is a board member of the Partnership for brand new York Metropolis and of Carnegie Hall. He beforehand served as a trustee of the Monetary Accounting Requirements Board, a member of the World Financial Forum’s Worldwide Enterprise Counsel, and a founding member of The Prince of Wales’ Worldwide Built-in Reporting Committee. Since 2010 he is contributed $5,250 to KPMG’s political action committee and $1,000 to Senator Charles Schumer, the new York Democrat who serves on the Senate’s Finance Committee.
Laban P. Jackson, Jr. 70, is CEO of Clear Creek Properties, Inc. a real property development company, has been a JPMorgan director since 2004. He serves as a director of Gulf Stream House, Backyard, Inc, TBN Holdings, Inc, and South Street Securities Holdings, Inc. He was on the boards of Financial institution One Company (1993-2004), Home Depot (2004-2008), Interactive Footage Corporation (1989-2000).and Ipix Corporation (2000-2006). He was a director of the Federal Reserve Bank of Cleveland from 1987 to 1992. He is also a director of Markey Most cancers Foundation. Since 2009 he has contributed $10,900 to Andy Barr, a Kentucky Republican, who lost his race for Congress Congressman in 2010 but received in 2012.
Two individuals with lengthy-time period ties to Dimon didn’t get to vote on his pay enhance. Last July, David Cote (CEO of Honeywell Worldwide) and Ellen Futter (president of the American Museum of Natural History) resigned from the JPMorgan board after receiving weak assist from shareholders at the financial institution’s annual shareholder meeting. Futter earned solely 53 percent of the shareholder vote, whereas Cote received fifty nine percent. Crown garnered solely 57.4 p.c of shareholders’ votes but remains on the board.
Both Cote and Futter had extensive enterprise and political ties. Cote had served on JPMorgan’s board since 2007. In 2012, his compensation at Honeywell totaled $55.7 million, including $1.Eight million in salary, $23.3 million in bonuses, $22.9 million in stock features, and $7.7 million in different advantages. Honeywell’s directors gave Cote an enormous compensation increase from the earlier year, when he earned solely $37.Eight million. Cote is a member of the Enterprise Roundable, the highly effective foyer group comprised of the CEOs of the nation’s largest firms. In 2009, President Obama named Cote the co-chair of the U.S-India CEO Discussion board. The next year Obama named Cote to serve on the bipartisan Nationwide Fee on Fiscal Responsibility and Reform. He contributed $2,000 to George W. Bush’s 2000 election campaign and to different Republican politicians.
Futter had been a JPMorgan director since 2001. She was president of Barnard Faculty from 1981 to 1993. She started her career as a lawyer with the high-powered company law agency, Milbank, Tweed, Hadley & McCloy. She is on the board of Consolidated Edison, the large utility firm. She previously served on the boards of American Worldwide Group Inc. (1999-2008) and Viacom (2006-2007). She was a director of the Federal Reserve Bank of recent York (1988-1993) and served as its Chairman (1992-1993). She is a member of the board of Memorial Sloan-Kettering Cancer Middle, Brookings Establishment, and the American Ditchley Foundation.
Peter Dreier teaches Politics and chairs the City & Environmental Coverage Department at Occidental School. His newest ebook is The 100 Best People of the twentieth Century: A Social Justice Corridor of Fame (Nation Books, 2012).