Coverage: JPMorgan CEO gets raise despite cutbacks

JPMorgan Chase & Co. CEO James Dimon saw a 35 percent hike in compensation for 2015, despite industrywide cutbacks. Dimon will receive $27 million in total compensation for the year, the company disclosed in a securities filing.

Emily Glazer of The Wall Street Journal had the day’s news:

J.P. Morgan Chase & Co. Chief Executive James Dimon will receive $27 million in total compensation for 2015, up 35%—or $7 million—from 2014, according to a securities filing.

The chairman and chief executive’s pay package includes $20.5 million in performance-related restricted stock and $5 million in cash, along with his base salary of $1.5 million, according to the filing. The total compensation is up from his 2014 pay package of $20 million, though it includes less cash and more in restricted stock.

This is the first year Mr. Dimon is being paid in so-called performance share units, a type of restricted stock that has requirements on how long it must be held and has the possibility of being worth nothing based on the performance of Mr. Dimon and the bank.

The new features are designed to respond to a shareholder proposal last year that nearly garnered a majority in voting against Mr. Dimon’s pay package.

Liz Moyer of The New York Times detailed how Dimon’s restrictive stock package works:

This is the first year JPMorgan is using performance share units as part of the variable pay for its top executives. The units are tied to whether the bank meets certain financial performance goals over the next couple of years.

Mr. Dimon’s salary was $1.5 million last year, the same as the previous year. His cash bonus dropped to $5 million from $7.5 million, but his stock award jumped to $20.5 million from $11.1 million.

For 2014, Mr. Dimon got restricted stock units. He did not get a pay increase from 2013 to 2014, receiving $20 million both years.

JPMorgan shareholders nearly voted down 2014 pay for the bank’s top executives at last spring’s annual meeting, prompting the move to performance-based awards.

Only 61 percent of votes cast were in favor of the bank’s executive compensation after it came under heavy criticism from the influential proxy advisory firms Institutional Shareholder Services and Glass Lewis & Company, which said the board’s policies did not adequately link pay to performance.

About 40 percent of Mr. Dimon’s bonus was in cash for 2014. For 2015, that percentage dropped to 20 percent.

Last year, JPMorgan’s stock rose 5.7 percent, significantly outperforming its major rivals, almost all of which ended the year in the red.

Kaja Whitehouse of USA Today explained how the Dimon’s jump in compensation is interesting considering the struggle most Wall Street banks have been facing:

This year’s stock grants are tied to new, three-year performance metrics. This could help alleviate criticisms, which bubbled up last year, that Dimon’s pay is not properly tied to performance.

JPMorgan “is now one of the few, if not the only, large financial institution that does not tie any element of CEO pay to achievement of goals for a specific metric or metrics,” proxy advisory firm ISS said last year ahead of a controversial shareholder vote on the bank’s pay.

Banks emerged from a tough 2015 only to face worsening conditions this year, including rising costs tied to souring energy loans.

As a result, bank CEOs are expected to take the ax to personnel costs — their single largest expense — as they scout for new ways to boost profits.

Morgan Stanley and Bank of America have already said they are planning to slash expenses this year through either layoffs or by moving jobs to cheaper cities.

In 2015, JPMorgan cut staff by 3%, or 6,761 jobs. Compensation costs at the New York bank fell by 1% last year.