Jamie Dimon, whose eight years atop JPMorgan Chase & Co. (JPM) have made him one of Wall Street’s most powerful leaders, said he’ll start treatment for throat cancer, raising new questions about succession plans at the biggest U.S. bank.
Dimon, the company’s chairman and chief executive officer, told employees and shareholders in a memo his condition is curable and that he’ll continue running the firm “as normal” during eight weeks of radiation and chemotherapy. The treatment will start soon at Memorial Sloan Kettering Cancer Center in New York, limiting his travel, the CEO said.
Dimon, 58, has led New York-based JPMorgan since the end of 2005, navigating the 2008 financial crisis without a loss and doubling annual profit as the lender’s shares climbed about 45%. Six months ago, the board credited his ability to resolve government probes of the bank. The illness will revive questions about how the panel would theoretically handle his succession, said Ralph Cole, a portfolio manager at Ferguson Wellman Capital Management Inc. in Portland, Oregon.
“Transition has always been a question and now that will be at the top of investors’ minds,” Cole said. “They have to be very vocal about who’s going to be stepping up during the eight-week period. They’ve got to be clear with everybody about who that is.”
The bank has deep contingency and succession plans, and Dimon’s illness may serve as no more than a valuable “fire drill,” said Michael Farr, president of Farr Miller & Washington LLC, a Washington-based asset manager that oversees more than $1.1 billion, including JPMorgan shares.
“The good news is that every indication is that they will never be needed and that Jamie Dimon has many years to work and that he’ll retire on his own schedule as a much older man,” Farr said. “It feels unfair to watch someone who has really been through so much have to suffer through this.”
JPMorgan declined 0.9% to $57.06 at 10:22 a.m. in New York. The shares have slipped 2.5% this year, compared with the 3.6% advance of the 24-company KBW Bank Index.
Dimon canceled a planned business trip to Europe this week in which he was to meet with the prime ministers of Greece and Italy, said Joe Evangelisti, a spokesman for the bank. The CEO probably will cut back on client visits during the treatment, Evangelisti said.
The board has succession plans for the short-term, medium-term and long-term should they be needed, Evangelisti said, declining to disclose the plans.
Dimon told colleagues he wants to remain CEO for an additional five years, a person with direct knowledge of the matter said in March. In his memo, he said he feels good, is keeping the board fully apprised, and that he’ll say more if his condition changes.
“The prognosis from my doctors is excellent, the cancer was caught quickly and my condition is curable,” Dimon wrote, according to a statement yesterday from the bank. “I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal.”
“The cancer is confined to the original site and the adjacent lymph nodes on the right side of my neck,” he wrote. “Importantly, there is no evidence of cancer elsewhere in my body.”
The son of a stock broker, Dimon is known for his charm and brusque manner. In 2011, he publicly challenged Federal Reserve Chairman Ben Bernanke over new regulations. In 2012, Dimon said the nation’s housing market would have been fixed faster if he had been put in charge.
“He’s one of the iconic CEOs who’s totally identified with a company,” said Nancy Bush, a bank analyst who founded NAB Research LLC in New Jersey. “It’s tremendously important that people know he’s still there, and I’m sure that will still be happening.”
The bank posted its first quarterly loss under Dimon’s leadership last year as it agreed to pay $23 billion in penalties and settlements. Full-year net income fell 16% to $17.9 billion. Profit will rebound to $21 billion this year, according to the average estimate of analysts surveyed by Bloomberg.
“Clearly this is a seminal moment for JPMorgan,” said Christopher Wheeler, an analyst at Mediobanca SpA in London, who has a neutral rating on the lender. “The problem is a number of the candidates to replace Jamie have left the bank in the last 18 months, so filling his shoes, which is a very big job, will not be straightforward.”
Mike Cavanagh, once seen as a potential successor to Dimon, left in March to become co-chief operating officer of private-equity firm Carlyle Group LP, marking the 11th departure among 14 top deputies identified in a 2008 Fortune magazine piece.
Gordon Smith, 55, who heads the consumer bank, would be the likely candidate if a temporary leader is needed, and Chief Operating Officer Matt Zames, 43, is viewed as a “longer-term heir apparent,” said Charles Peabody, an analyst at Portales Partners LLC.
A person familiar with the company’s discussions said in March that other potential successors include Mary Erdoes, 46, CEO for asset management; Daniel Pinto, 51, who runs the corporate and investment bank; Doug Petno, CEO of the commercial bank; and Chief Financial Officer Marianne Lake.
Even after close colleagues left “I don’t for a second believe the people who took their places are a step down,” said Michael Holland, chairman of New York-based Holland & Co., which oversees more than $4 billion in assets including JPMorgan shares. “Jamie Dimon attracts very good people,” he said. “He was tested by the fires of the financial crisis and showed what leadership can do.”
Questions about succession died down after Dimon survived the fallout from a trading loss of more than $6.2 billion in 2012 at the firm’s chief investment office, and as he resolved multiple criminal and regulatory probes into the bank, said Cole, whose firm oversees $4 billion including JPMorgan shares.
“Somehow he came through it and he reasserted his leadership,” Cole said. “Now it kind of throws it back to the forefront, just like it would any company.”
About 27,000 cases of throat cancer are diagnosed annually with an estimated 6,100 deaths attributed to the disease each year in the U.S., according to the National Cancer Institute.
Throat cancer includes tumors discovered in a variety of areas including the larynx, the part of the throat between the base of the tongue and the trachea, and the nasopharynx, the upper part of the throat behind the nose. Prognosis depends on variables including the location and size of the tumor and the age and general health of the patient.
Treatment options include surgery to remove the tumor, radiation and chemotherapy, which is drugs that stop the cancer’s growth or kill the tumor cells, according to the cancer institute. Evangelisti said Dimon doesn’t smoke and that his doctors didn’t determine a clear cause.
Dimon was a smoker while working at Commercial Credit Co. in the 1980s before he quit and encouraged fellow executives to do the same, according to the book “Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase,” by Duff McDonald.
Frank Bisignano, who ran JPMorgan’s mortgage business under Dimon before becoming CEO of First Data Corp. defeated throat cancer several years ago, according to a 2011 interview in the Financial Times.
CEOs including billionaire Warren Buffett of Berkshire Hathaway Inc. and Robert Benmosche of insurer American International Group Inc. have continued to lead their companies after being diagnosed with cancer.
Buffett, 83, who built Omaha, Nebraska-based Berkshire into a $313 billion company over more than four decades, received radiation treatment for stage 1 prostate cancer in 2012. Benmosche, now 70, announced in 2010 he would undergo chemotherapy. He will step down at the start of September after holding the post longer than previously planned.
Steve Jobs, the co-founder of Apple Inc., suffered from a rare form of pancreatic cancer, a more-malevolent illness than the one Dimon faces. Jobs disclosed his condition in 2004 and continued to lead the technology company until resigning the CEO post in August 2011. He died less than two months later at 56.
“It’s hard given his profile not to think about Steve Jobs and wonder,” Farr said, referring to Dimon. “But from all reports, this is a very different type of cancer, it’s a completely different prognosis and I don’t think there’s any reason to be anything other than optimistic and encouraged.”
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