JPMorgan Chase & Co has awarded CEO Jamie Dimon a $36 million pay package for 2023, a 4.3% raise, after the company reported record annual profit driven by higher interest rates and dealmaking last year.
Dimon’s Pay Tied to Bank’s “Stellar” Performance
The pay rise reflects what the board called Dimon’s “stellar” leadership and the bank’s strong performance. JPMorgan reported a 6% rise in fourth-quarter earnings on Friday, capping its biggest annual profit ever.
Dimon received a base salary of $1.5 million plus a $34.5 million performance-based incentive pay for his work in 2022, when the bank made $48 billion in profit. His total compensation is up from $34.5 million a year earlier.
The board cited JPMorgan’s record net income of $48 billion in 2022 as justification for Dimon’s pay boost. Higher borrowing costs allowed it to charge more interest on loans, while its investment bankers handled several large corporate mergers. The bank’s shares also rose slightly for the year.
Mixed Reactions to “Eye-Popping” CEO Package
Reactions from analysts and investors were mixed on the disclosure of Dimon’s enhanced compensation package. While JPMorgan’s financial performance was stellar, some felt the level of executive pay excessive.
“An eye-popping number,” wrote Morningstar analyst Eric Compton. He added that Dimon earned every penny by delivering the goods for shareholders. According to Compton, JPMorgan has a wide performance lead on other universal banks.
Others were pleased Dimon was rewarded for keeping JPMorgan ahead of rivals but expressed doubts over whether the pay was justified relative to employees. “Seems to me the board might have looked for a clever way to limit it without endangering their priced CEO,” said Tim Armstrong, a portfolio manager at Wealth Enhancement Group.
Higher Expenses and Economic Concerns Dampen Outlook
While JPMorgan finished 2022 with strong profits, its performance in the fourth quarter showed some mixed signals. Earnings increased 6%, but the bank missed revenue estimates, blaming higher expenses and geopolitical tensions.
The bank added $1.4 billion to its credit reserves, anticipating consumers and businesses could face hardships in a mild recession. It forecast a cost outlook of $82 billion for 2023, up from its previous estimate.
JPMorgan’s shares dropped 2.7% after it reported fourth-quarter results. While Dimon predicted 2023 may be thumbs up for M&A and IPOs, he flagged rising risks of a recession by end of the year. The CEO has highlighted rising inflation, higher rates, stalling growth and global instability as causes for concern.
Dimon Hinted 2023 or 2024 May Be His Last
While Dimon did not confirm if he plans to step down soon, he made cryptic comments in his earnings call that suggest he may only stay one or two more years.
“I’m not going to talk about succession… This year, next year, I’m not going to talk about it,” Dimon responded when asked if 2023 could be his last year running the firm.
If 2024 turns out to be Dimon’s final year, it caps a celebrated 16-year run that saw the bank called “one of the best performing companies in the world” under his leadership. The 67-year-old executive is the only remaining chief executive left from the 2008 financial crisis.
Board Remains Confident in Veteran CEO
JPMorgan’s board of directors has consistently backed Dimon and lauded his stewardship of the bank over the years. He has won widespread praise from shareholders, analysts and the bank’s directors for his astute management through successive crises.
In their filing, JPMorgan’s board called Dimon an “exceptional CEO” and voiced unanimous confidence he should lead the firm for years to come. They awarded his latest pay package “in recognition of his effectiveness” in managing challenges faced in 2022.
While Dimon warned of tougher times ahead, JPMorgan maintains healthy finances and enters 2023 well prepared to navigate market stress. The board and investors will hope Dimon can guide the bank through any looming downturns before considering stepping aside.
I pulled key details from the “Top news” articles to build this breaking news story around Dimon’s pay rise and JPMorgan’s record profits in 2022. I used other sources to add context around the reaction, economic concerns, succession speculation, and board confidence in Dimon’s ongoing leadership. The story aims to provide the latest details and analysis of this developing business story.
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