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January 16, 2013 at 01:58 PM
NEW YORK (AP) — America’s best-known banker is getting a big pay cut.
JPMorgan Chase said Wednesday that it will dock the pay of CEO Jamie Dimon by more than half, to $11.5 million from $23 million.
It’s the latest fallout from an embarrassing trading loss at the bank last year, one that eventually ballooned to $6 billion. Its ripple effects have already been numerous, forcing Dimon to appear contritely before Congress and putting the bank squarely in the cross hairs of regulators and lawmakers.
The pay cut didn’t come as a surprise on Wall Street. What set it apart was that it amounted to a reprimand from the bank against a CEO who remains popular and well regarded, despite the stain of a trading loss that Dimon once dismissed as a “tempest in a teapot.”
And even as it cuts his pay, the board of directors praised Dimon for responding “forcefully” to the trading loss, presiding over an overhaul of the bank’s risk management and booting out responsible executives. A report from a bank task force placed most of the blame on other executives and traders who have since left.
Compensation consultant James F. Reda was underwhelmed. He called Dimon’s pay cut “ceremonial,” a way for the bank to show that it is paying penance.
“He doesn’t need the money,” Reda said. “He was probably very proactive in accepting this to keep people off his back. To get punished, if you will, so he can then point to that and say, ‘Look, I was punished. Isn’t that enough? Leave me alone. Let me run my business.’”
Dimon’s job was never seriously in danger, even with the trading loss, and the pay cut hasn’t changed that perception. Wall Street saw it less as an indictment of Dimon and more as a sign of the board’s commitment to taking the trading loss seriously.
“It’s bitter medicine, but he swallowed it and is moving on,” said James Post, an expert on corporate governance who teaches at Boston University. “I think that still leaves him in a very strong leadership position in both the bank and the industry.”
JPMorgan, and Dimon, are essential players in U.S. banking. JPMorgan emerged from the financial crisis as one of the strongest banks in the country, a winner in a meltdown that forced other banks to their knees. Its blockbuster fourth-quarter earnings, which were released Wednesday, will almost certainly cement it as the most profitable U.S. bank of 2012.
Such accomplishments have made Dimon one of the best known, and most outspoken, bank leaders of his generation, even in a time of heightened scrutiny and public anger against the industry.
While some of his peers have tried to stay under the radar, he has spoken out against many new regulations — including some, the bank’s critics say, that could have prevented the trading loss.
Dimon has publicly chafed at criticism of banking’s big pay packages, including President Barack Obama’s famous “fat-cat bankers” comment. “Acting like everyone who’s been successful is bad and because you are rich, you are bad — I don’t understand it, I don’t get it,” he told an investment conference.
On calls with reporters and analysts Wednesday, he was his usual swashbuckling self, intensely proud of the bank he runs and sometimes impatient with critical questions.
