JPMorgan board slashes executive's bonus over losses
JPMorgan Chase & Co's board of directors cut chief executive Jamie Dimon's annual bonus in half, citing the billions lost in the company's "London Whale" trading loss.
Mr Dimon's pay was slashed even though JPMorgan, the largest US bank, said fourth-quarter net income jumped 53pc, and earnings for 2012 set a record. The fourth-quarter results were helped by increased mortgage lending profits and a decline in the costs for bad loans.
The board said the bank's strong results were a key reason to give Mr Dimon a bonus, but the London trading losses cut into his compensation.
"As chief executive officer, Mr Dimon bears ultimate responsibility for the failures that led to the losses in the Chief Investment Office," the bank said in a filing yesterday with the Securities and Exchange Commission.
Mr Dimon's pay for 2012 was $11.5m (€8.6m), the company said in the filing, including a salary of $1.5m and a bonus of $10m. In 2011, Mr Dimon was paid $23m, including the same salary and a bonus of $21.5m.
Mr Dimon told reporters he "respects" the board's decision.
The board's move followed calls after the financial crisis for companies to cut, or even take back, pay from executives at companies that lose money for failing to control risk.
"It is not going to affect his lifestyle, but it is important symbolically," said Charles Elson, director of the John L Weinberg Centre for Corporate Governance at the University of Delaware.
The trading loss, which was suffered primarily in the second quarter of 2012, has been a major embarrassment. The debacle has become known for the London Whale nickname given to JPMorgan trader Bruno Iksil for the large positions he established from London for the Chief Investment Office. The trade became too big for the company to exit easily.
JPMorgan shares edged up 0.2pc to $46.41 in mid-day trading.