May 21, 2019
CEO Jamie Dimon received total compensation of $31.5 million in 2018.
ISS recommended against the compensation proposal and the company issued a supplemental filing arguing in favor of voting for management proposals and against shareholder proposals.
One of the points the company made in that filing: “Our executive compensation program is designed to hold executives accountable, when appropriate, for meaningful actions or issues that negatively impact business performance or the Firm’s reputation in current or future years.”
But what if the compensation of the executive in itself is negatively affecting the firm’s reputation? After Morehouse commencement speaker Robert Smith promised to cover student debt for those students, the satirical Onion posted, “Chase CEO Giving Commencement Speech Pledges To Double Whole Class’s Student Loan Debt” with a large photo of Dimon.
When Dimon testified in Congress earlier this year, Congresswoman Katie Porter noted that the starting pay for a bank teller was approximately $24,000. She attempted to create the tightest possible budget for a constituent living in her district and attempting to live on that pay, and found it impossible to make it work. The video of the discussion below, excerpted from the Hill, has been viewed by hundreds of thousands of people:
“She's short $567 [each month], what would you suggest she do?" Porter asked.
"I don't know, I'd have to think about that," Dimon said.
"Would you recommend that she take out a JPMorgan Chase credit card and run a deficit?" Porter continued.
"I don't know, I'd have to think about it,” the CEO repeated.
“Would you recommend that she overdraft at your bank and be charged overdraft fees?" Porter asked.
"I don't know, I'd have to think about it.”
In its supplemental filing to urge shareholders to vote in favor of management proposals, JPMorgan Chase reprinted its summary compensation table, as if to say, “Look, who could argue with this?” There’s a tone deafness that seems to pervade Wall Street.
In addition to objecting to the reputational damage caused by Dimon’s pay, there are more conventional reasons shareholders may vote against the package.
According to press reports, ISS has recommended that shareholders vote against, describing the elements that drove up pay as “factors assessed were described only vaguely and appear subjective.”
Calvert Research & Management, which has already posted its intent to vote against the package, noted concerns around the vesting design for such a large award, including that the relative measure targets merely median performance, and awards are earned based on three periods measured annually, rather than a true long-term measurement period.”
In addition, Calvert noted, “The CEO's PSU [performance share unit] award of $24.5 million alone was larger than the median of total pay of CEO peers.”