For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.
Getting rejected always hurts. Getting rejected, and losing out on tens of millions of dollars in the process, hurts even more. Just ask Jamie Dimon.
On Tuesday, JPMorgan Chase shareholders voted against a pay plan for the bank's six top executives, which would've seen Dimon awarded $50 million as a one-off award. Feel free to shed a crocodile tear or two.
Dimon's in the Rough
Only 31% of shareholders voted yes as part of the "say on pay" vote to award the executives a total of $201 million for their work in 2021. It's a harsh rebuke of Dimon and his leadership team, which helped steer the megabank to record full-year earnings last year, and marks a razor-sharp reversal of last year's 90% vote of support for similar executive payouts. What's more, it's the first time an executive pay package has failed to earn shareholder approval since the "say on pay" vote was instituted in 2009.
While the resolution is technically an advisory one, the bank's Compensation & Management Development Committee does take the outcome of the vote into account. That outcome could signal an increasing failure by shareholders and the board to see eye to eye on a vision for the bank's future. The board says the proposed package reflected its desire to see the 66-year-old Dimon remain at the helm for years to come, but shareholders are increasingly wary of the bank's newfound willingness to spend:
- In February, shareholders criticized Dimon for offering too few details on an ambitious plan to spend $15 billion -- most of it on new technologies meant to fend off disruptive fintechs (for context, that amount is more than the GDP of Belarus, a traditional hub of high-tech talent). The reversal in Dimon's typically cost-conscious habits marks a 50% increase in spending compared to 2019.
- "Excessive one-off grants to the CEO and COO amid tepid relative performance worsen long-standing concerns regarding the company's executive pay program," Glass Lewis, an influential proxy advisor, wrote in a letter urging shareholders to reject the pay package. JPMorgan's share price is down roughly 30% from an October high, and is now below pre-pandemic levels.
Jamie Rides the Bus: Dimon, worth $1.6 billion according to Forbes, already earned $34.5 million from the bank in 2021 -- though mostly in the form of restricted stock. If New York City Mayor Eric Adams has his way, Dimon will be spending his transportation budget $2.75 at a time. In a push to encourage workers to return to downtown offices, Adams has publicly urged high-profile CEOs to "ditch their customary black cars" and opt for symbolic subway rides instead. With the cost of living spiking up, without that extra $50 million, it may be all Dimon can afford. Emphasis on maybe.