Is JPMorgan CEO Jamie Dimon Really Worth $1 Billion?

Jamie Dimon has accumulated nearly $500 million worth of JPMorgan shares.

Alex Dumortier
Alex Dumortier, CFA
Jun 3, 2015 at 11:15AM

Stocks are slightly higher on Wednesday, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the broader S&P 500 (SNPINDEX:^GSPC) up % and %, respectively, at a.m. EDT. With shares of Dow component JPMorgan Chase (NYSE:JPM) near the all-time high they set last month, Bloomberg reported this morning that the bank's CEO, Jamie Dimon, has an estimated net worth of $1.1 billion. That's a rare feat for the CEO of a financial institution who is not also founder (Lehman Brothers' disgraced CEO Richard Fuld achieved it -- for a time). Is such a sum justified?

Photograph by Stefen Chow/Fortune Global Forum.

According to Bloomberg, Dimon has accumulated $485 million worth of JPMorgan Chase shares, with the rest of his wealth made up of an investment portfolio funded by Citigroup (NYSE:C)stock sales (under Sandy Weill, Dimon rose to become president of Citigroup until he was pushed out in 1998).

That stock number might seem egregious for someone who only joined JPMorgan in 2004, when it acquired Bank One, which he was running. Still, at least one very credible source believes Dimon is underpaid. Berkshire Hathaway (NYSE:BRK-B) CEO Warren Buffett told The Wall Street Journal in January 2014: "If I owned J.P. Morgan Chase, he would be running it and he would be making more money than the directors are paying him. If Jamie decides he wants to make more money, all he has to do is call me and I'd hire him at Berkshire."

While Berkshire Hathaway doesn't own shares of JPMorgan Chase, focusing instead on Wells Fargo, Buffett told Bloomberg Television in July 2012 that he owns 1 million shares of the bank in his personal account.

I've been a critic of Dimon in the past, particularly regarding some of his outspoken positions on banking regulation, but I'm perfectly willing to acknowledge he's likely a very capable, perhaps even exceptional, banking executive. But let's get down to brass tacks: What has he done for shareholders? The following chart compares the stock performance of JPMorgan Chase against that of Bank of America (NYSE:BAC), Citigroup, and the S&P 500 beginning on Jan. 3, 2006 (Dimon was named president and CEO at the end of 2005):

JPM Chart

JPM data by YCharts.

Under Dimon's leadership, JPMorgan's share performance has trounced that of its closest comparable institutions -- but that's not much of a benchmark, given their catastrophic performance over this period. Furthermore, JPMorgan shares trailed those of Wells Fargo (justifying Buffett's preference for the latter) and only roughly kept pace with the S&P 500. The latter comparison is a disappointing result if one considers the quality of the franchise Dimon inherited in an oligopolistic industry.

In fairness, though, I ought to mention that JPMorgan shares also smashed the Dow Jones Banks Titans 30 Index, which is down by more than a third over the same period (the index contains 30 of the top global banks; note that Bank of America and Citigroup have a combined 12.6% weighting.)

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All told, while the numbers cited above might seem like obvious examples of excessive CEO compensation, I don't think Dimon is the poster boy for this very real problem. He's the capable leader of a world-class franchise, so one ought to expect him to earn serious money. In fact, it's conceivable that the financial crisis would have been much less costly if Jamie Dimon clones had been running Bank of America and Citigroup instead of the banks' actual CEOs (Ken Lewis and Chuck Prince, respectively) in the run-up to 2008-9.