(Updates with consultant’s comment in the seventh paragraph.)
Jan. 24 (Bloomberg) -- JPMorgan Chase & Co. gave Chief Executive Officer Jamie Dimon a 74 percent raise to $20 million last year, bringing his pay closer to where it stood before he was penalized for faulty oversight of botched derivatives bets.
The board’s compensation package for Dimon, 57, who also serves as chairman, included $18.5 million in restricted stock, the New York-based lender said today in a regulatory filing. His salary was unchanged at $1.5 million and he got no cash bonus, according to the filing.
Board members decided to keep Dimon’s pay below previous peak levels after criminal and regulatory probes cost JPMorgan more than $23 billion in settlements during 2013. The directors cut his 2012 package in half last January to $11.5 million, saying he bore “ultimate responsibility” for failures that led to derivatives trading losses in the London Whale episode.
In raising Dimon’s pay, the board of directors cited “sustained long-term performance; gains in market share and customer satisfaction; and the regulatory issues the company has faced and the steps the company has taken to resolve those issues,” according to the filing.
The restricted stock vests 50 percent after two years and 50 percent after three years, the bank said. Awarding Dimon’s total bonus in shares ties his pay “to the company’s future performance, including continued progress on the company’s regulatory agenda,” the firm said.
The board’s compensation committee is led by Lee Raymond, 75, Exxon Mobil Corp.’s former chairman and CEO. JPMorgan’s stock climbed 33 percent last year, matching the 81-company Standard & Poor’s 500 Financials Index.
“Obviously they paid more attention to the operational performance and stock-price performance and less to the litigation issues,” said Joseph Sorrentino, a managing director at Steven Hall & Partners, a New York-based compensation consulting firm. “Maybe there’s an argument that settling those items at those levels and removing the uncertainty there, maybe that’s worth something as well, but hard to know.”
Chief Financial Officer Marianne Lake, 44, received 80,346 shares, worth $4.65 million at the price of $57.875, the level at which Dimon’s shares were valued. Chief Operating Officer Matt Zames, 43, received stock valued at $9.75 million, as did Mike Cavanagh, 48, co-head of the firm’s corporate and investment bank.
Daniel Pinto, 51, the other co-head, received the same total pay as Cavanagh, and it was structured differently because of compensation rules in the U.K. where Pinto is based, according to a person briefed on the awards.
Any cash awards for named executives will be disclosed in the firm’s proxy statement later this year.
Dimon became CEO at the end of 2005 and added the title of chairman a year later. His reputation as a top manager, along with his pay, has fluctuated since then. While JPMorgan emerged from the financial crisis as the only large U.S. bank to avoid quarterly losses, the trading debacle in 2012 prompted some investors to call for splitting his dual roles. Shareholders rejected that proposal at a meeting in May.
Dimon was paid $49.9 million for 2007, including special stock awards. During the financial crisis a year later, he took only a $1 million salary. He got $15.2 million for 2009, and $23 million for each of the two years that followed.
In last year’s third quarter, the bank posted its first loss on Dimon’s watch after taking a $7.2 billion charge to cover the cost of mounting litigation and regulatory probes. The deficit ended the firm’s streak of three record annual profits. Full-year net income fell 16 percent to $17.9 billion.
Dimon pushed last year to resolve government investigations, including at least eight Justice Department probes listed in the firm’s quarterly report in October.
Settlements since then have included a record $13 billion deal to resolve inquiries into mortgage-bond sales. The bank paid $2.6 billion and avoided criminal prosecution while settling claims it failed to stop Bernard Madoff’s Ponzi scheme. The firm also paid more than $1 billion last year tied to the botched derivatives bets, which lost more than $6.2 billion in 2012. In that case, U.S. and U.K. regulators faulted its oversight of a trader known as the London Whale because his positions were so large.
Dimon told journalists earlier this month that he couldn’t predict whether he might be able to put the legal disputes behind the bank this year.
--Editors: Rick Green, David Scheer, Steven Crabill