Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



JPMorgan Shareholders Unhappy About CEO Pay

In its annual meeting yesterday, a mere three-quarters of shareholders supported JPMorgan's (NYSE: JPM  ) executive pay program, well down from over 90% last year.

At the other two main Wall Street banks, support for pay programs was substantially higher. On May 16, 83% of shareholders voted for Goldman Sachs' (NYSE: GS  ) Say on Pay proposal, the management resolution that asks shareholders to approve or disapprove of executive pay each year, and on May 13, 92% of Morgan Stanley's (NYSE: MS  ) shareholders supported pay.

Major proxy advisory firm Glass Lewis, which advises big investors on how to cast their votes at annual meetings, had advised its clients to vote against pay at all three companies, citing a lack of correlation between pay and performance. Major public pension fund The Florida State Board of Administration (FSBA), which manages the Florida Retirement System Trust Fund, was one of the major shareholders that announced that it would oppose the pay package for Dimon. FSBA is a client of Glass Lewis, but receives voting advice from several other firms, as well as performing its own analysis of the pay-performance link. Clearly, JPMorgan failed this analysis.

Big payouts

What is certain is that all three CEOs received substantial rises this year, but only Morgan Stanley really delivered on performance, reflected in a higher share price gain over 2013, although admittedly it had further to climb. Goldman Sachs CEO Lloyd Blankfein earned a $21 million cash and equity bonus for 2013, as well as a $2 million salary. Morgan Stanley CEO James Gorman earned a salary of $1.5 million and a cash and equity bonus of $16.5 million.

And JPMorgan CEO James Dimon's salary was the same, at $1.5 million, but his bonus was higher: $18.5 million. Recent losses at the bank, and its lower net income in 2013 compared to 2012, will have made that $18.5 million bonus a little hard to swallow, especially with the billions of dollars in fines that the bank has had to pay out for missteps under Dimon's watch.

This year's meeting was also the first in many that did not require shareholders to vote on taking the chairmanship away from Dimon to improve oversight at the bank. Last year Dimon threatened to leave if the chairmanship was removed from his list of job titles. Only around a third of shareholders supported separating the role last year, and this year, according to reports, Dimon has said that he will stick around for another five years ... as long as he stays chairman.

Pay, governance, and performance

The drive behind separating the CEO and chairman positions comes from shareholders' desire to have a strong, independent chairman leading the board, which would then be able to challenge management if it saw fit. Such challenges may have prevented some of the many actions that led to some of the largest fines in U.S. corporate history.

And as far as the link between pay and performance goes, the key is that shareholders are willing to pay for great performance. But if pay goes up in a year that has held so much bad news, the disconnect is glaring. It encourages executives to think that they will be paid, and paid well, regardless of whether they are actually delivering value to shareholders.

How to get even more income during retirement

Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2967079, ~/Articles/ArticleHandler.aspx, 9/3/2015 1:34:48 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Paul Hodgson

Paul Hodgson is a freelance journalist and independent commentator on corporate governance as well as conducting contract work for governance research firm BHJ Partners. He was formerly The Corporate Library’s and then GMI Ratings’ Chief Research Analyst for board and executive compensation, and its most prolific author. Mr. Hodgson has been researching and writing about executive compensation for over 20 years, eight of which were spent in England, where he worked for the Incomes Data Services journal Management Pay Review as researcher and assistant editor. He is a prolific blogger and the author of numerous books and research reports on executive pay and has also had articles published in a number of journals, including ‘Forbes’, ‘Business Week’, ‘Responsible Investor’, ‘Directorship’, ‘Ivey Business Journal’, and ‘Directors and Boards’. Mr. Hodgson is the author of the book Building Value Through Compensation, published by CCH Publishing. He is widely quoted in national print media as an authority on executive compensation, and has appeared on numerous television and radio stations. Google

Today's Market

updated Moments ago Sponsored by:
DOW 16,398.01 46.63 0.29%
S&P 500 1,955.55 6.69 0.34%
NASD 4,747.34 -2.64 -0.06%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 1:19 PM
JPM $62.74 Up +0.17 +0.27%
JPMorgan Chase & C… CAPS Rating: ****
GS $185.36 Up +0.85 +0.46%
Goldman Sachs CAPS Rating: ***
MS $33.89 Up +0.10 +0.30%
Morgan Stanley CAPS Rating: ***