Source: Steve Jurvetson via Flickr.

This year, management and the board of directors at JPMorgan Chase (NYSE:JPM) faced a challenge many other public companies have been forced to deal with in recent years: shareholder discontent over executive pay. One of the proxy advisory firms campaigning against CEO Jamie Dimon's $20 million pay package argued that Dimon's $7.4 million cash bonus lacked "compelling rationale."

Yet there's a compelling argument to be made for Dimon's pay package: He gets results worth at least $20 million.

Barking up the wrong tree
Two proxy advisory firms advocated that shareholders reject this pay package, and their campaign nearly succeeded. Just 61% of shareholders voted in favor of Dimon's pay package, down from 74% last year. So far this year the average "yes" vote has come in at 92% for other companies, 51% higher than the support for Dimon.

The sticking point at JPMorgan for many is that $7.4 million in cash. This year will be the first time since 2011 in which Dimon has received a cash bonus. The logic is that executives should receive the vast majority of their compensation in long-term incentives tied to the stock's performance. Cash is the ultimate short-term incentive, while stock compensation aligns executives' motivation with those of shareholders.

But let's not ignore the fact that Dimon already owns 3.1 million shares of JPMorgan. He is, in fact, the bank's top individual shareholder. To argue that Dimon isn't incentivized to pursue the best long-term plan for the bank is laughable; he literally has more incentive than any other individual in the world.

JPMorgan has crushed it under Dimon's leadership
The other gripe from proxy advisors is that the Dimon's pay isn't justified by the company's performance. Let's dive into that briefly.

Last year, JPMorgan produced $21.8 billion in net income. The bank has $2.6 trillion in total assets. It's the largest U.S. bank by assets and the second-largest by profit. 

More impressive than these snapshots, though, is the bank's performance over the entirety of Dimon's leadership tenure. He was promoted to the chief executive position on Dec. 31, 2005. Since then, the bank's tangible book value is up 225%. Earnings per share are up 122% on an annual basis, beating Wells Fargo's (NYSE:WFC) 82% increase and U.S. Bancorp's (NYSE:USB) 27% rise over the same period.

JPMorgan cruised through the financial crisis with relative ease compared to almost every other bank in the U.S. This chart of the bank's tangible book value since Dimon became CEO really tells the story. Pay particular attention to the time period of the Great Recession: In terms of tangible book value, it is as if there was no recession at all. 

JPM Tangible Book Value (Quarterly) Chart

JPMorgan's financial successes go on and on. One could even argue that JPMorgan is the top-performing bank in the world. The company's performance more than justifies Dimon's pay package. 

Dimon's arrogance makes him an easier target than he should be
Unfortunately, Dimon's exemplary performance is often overshadowed by media snafus. Dimon is a highly confident executive, arguably to a fault.

In 2012, he infamously called the London Whale scandal a "tempest in a teapot" before having to backpedal while JPMorgan took a $6.2 billion loss from the rogue trades. It's worth noting that JPMorgan posted a then-record $21.3 billion profit that year despite the London Whale's trading losses.

In the wake of the executive pay controversy, Dimon described the investors who voted with the proxy advisory firms as being "lazy" and "probably not very good investors." Right or wrong, that kind of talk isn't how you play nice with your shareholders.

Dimon would probably argue that it's not about playing nice, but rather doing what is best for the bank. He's hard-nosed to the extreme, but he's also one of only a few human beings on the planet capable of managing a $2.6 trillion bank.

Warren Buffett thinks Dimon deserves a raise
Last year, Warren Buffett defended Dimon's pay package and abilities as a manager. He said in a Wall Street Journal interview, "If I owned JPMorgan Chase, he would be running it and he would be making more money than the directors are paying him."

If that endorsement wasn't enough, the Oracle of Omaha added, "If Jamie decides he wants to make more money, all he has to do is call me and I'd hire him at Berkshire." 

The banking industry has a bad reputation these days, and justifiably so. It makes perfect sense to question many of the practices that pervade the industry. However, it makes sense to expend valuable energy contesting Jamie Dimon's executive pay. JPMorgan shareholders should know better by now.