JPMorgan slashes CEO Dimon's pay on "Whale" trade

Wed Jan 16, 2013 6:44pm EST
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By David Henry and Rick Rothacker

NEW YORK (Reuters) - Jamie Dimon, JPMorgan Chase's (JPM.N: Quote) Chief Executive, had his 2012 bonus cut in half after the bank's board decided he should shoulder blame for $6.2 billion of "London Whale" trading losses.

Dimon's bonus cut, which cost him more than $10 million, came even as JPMorgan posted a 53 percent jump in fourth-quarter profit and record 2012 earnings. The fourth-quarter results were helped by increased mortgage lending profits and a decline in bad loan costs. Without these results, Dimon's pay would have been worse.

Dimon's 2012 pay of $11.5 million will fall from being high for the sector to being ordinary. John Stumpf, the CEO of Wells Fargo & Co (WFC.N: Quote) made $18.9 million in 2011, while Brian Moynihan, CEO of Bank of America (BAC.N: Quote), made $8.1 million. In 2011, Dimon was paid $23 million.

In addition to posting earnings and disclosing Dimon's pay, JPMorgan released two company reports about the losing trades. The positions, known as the "London Whale" trades because they were so large relative to the market, lost a little more money for the bank in the fourth quarter. The reports added more detail to prior disclosures about the trades.

Money managers that own the stock said they were satisfied with the pay cut.

"We've been a long-time believer in linking pay to performance, and we think that linkage was made in this case," said Ricardo Duran, a spokesman for the California State Teachers' Retirement System, which owns JPMorgan shares.

The London Whale reports took attention from what otherwise would have been an upbeat day of financial results for Dimon and the company.

The bank benefited from significant tailwinds during the fourth quarter, including the Federal Reserve's decision in September to buy $40 billion of mortgage bonds a month, which triggered more trading in fixed-income products and lowered mortgage lending rates at some points during the quarter.   Continued...

A man walks past JPMorgan Chase & Co's international headquarters on Park Avenue in New York July 13, 2012. REUTERS/Andrew Burton