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Jamie Dimon Puts His Money Where His Mouth Is, Per Usual

By John Maxfield - Feb 12, 2016 at 9:35AM

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With shares of JPMorgan Chase down 20% since the end of last year, its CEO stepped up to the plate on Thursday with millions of his own money.

JPMorgan Chase CEO Jamie Dimon. Image credit: JPMorgan Chase.

Jamie Dimon has always put his money where his mouth is, and yesterday was no different. The JPMorgan Chase (JPM -1.00%) CEO bought 500,000 shares of the nation's biggest bank for a total of $26.6 million.

This is one of the reasons it's impossible not to admire the 59-year-old executive. Throughout his entire career at the helm of financial firms, Dimon has consistently increased the amount of skin he has in the game when it matters most.

As a young executive at a consumer finance firm in the mid-1980s, Dimon and his colleagues took stock options in lieu of large salaries. The company, after numerous mergers and acquisitions, eventually joined with Citicorp to form Citigroup in 1998.

Then, after he was fired from Citigroup because he refused to promote his boss's daughter, he took the reins at Chicago's Bank One. The nation's fifth biggest bank at the time was reeling from high default rates in its credit card unit, a bloated expense base, and turf battles among warring factions that had contributed to a 50% decline in its stock price.

Dimon invested half his net worth in Bank One's stock after stepping in as its CEO in 2000. As Patricia Crisafulli wrote in The House of Dimon:

If anyone doubted Dimon's commitment from day one at Bank One, he put his money where his mouth was. Proving that he was "all in" -- or as Dimon liked to say, that he was willing to eat his own cooking -- he invested nearly $60 million of his own money, estimated to be half his net worth at the time, in Bank One stock.

The significance of the move was "symbolic and substantive," Crisafulli went on to explain.

It also energized Bank One employees, who recognized that the new CEO had committed personally as well as professionally to the company's success. "There was a real buzz among the people at Bank One when he made the stock purchase. It showed he meant business," recalled [a former employee].

Then, after the 2004 merger between Bank One and JPMorgan Chase that included Dimon as its crown jewel, he did the same thing at the nadir of the financial crisis. After peaking at $53 per share in 2007, shares of JPMorgan Chase had fallen to less than $20 by the beginning of 2009. Dimon responded by purchasing 500,000 shares of stock at an average price of $22.93 a share.

Data source: JPMorgan Chase, The Wall Street Journal.

And Dimon did so again after shares of JPMorgan Chase were pummeled in the wake of the 2012 London Whale scandal that cost the bank $6 billion in trading losses. Between March and June of that year, the bank's shares fell by 30%, at which point Dimon bought another 500,000 shares for himself and his wife.

If you look up in the dictionary how a CEO is supposed to behave, this is what you'd find. Dimon's reputation among those who know him best is that he always does the right thing, even though it's typically not what's easiest. As he himself has noted with respect to risk management, "You can say it all you want, but unless you do it, no one gives a damn."

John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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