JPMorgan has clutch of CEO understudies, people guessing on winner

Fri Nov 18, 2016 1:20am EST
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By David Henry

NEW YORK (Reuters) - JPMorgan Chase & Co is once again facing questions about who will succeed its larger-than-life chief executive after Jamie Dimon was courted by the incoming U.S. president for the role of Treasury secretary.

Dimon, 60, has been running the largest U.S. bank for more than a decade and has faced questions about his longevity in the role before: when potential successors left, when he allowed an embarrassing $6.2 billion derivatives trading loss and, most recently, when he was diagnosed with throat cancer in 2014.

Although associates have said Dimon is not interested in the Treasury job, the recent invitation from a member of President-elect Donald Trump's transition team to apply for the job was a reminder to interested parties, including some investors, that his time at the helm is finite.

"He is not going to be CEO forever," said Walter Todd, chief investment officer at Greenwood Capital Management, which owns JPMorgan shares.

Although a sudden departure would not necessarily lead the investor to sell the stock, it would be "troubling," Todd said. "I would have to gain some comfort with who was taking over that role."

Dimon will not be easy to replace. He has won a higher valuation for JPMorgan stock than rival banks by shepherding it through the financial crisis without any quarterly losses, while earning relatively high returns on equity and explaining the workings of the bank to analysts as though he were a demanding business school professor. 

He has been quick to point out that the JPMorgan board has a succession plan in place, whether he departs abruptly due to unforeseen circumstances – known colloquially as a "hit by a truck" scenario – or whether he takes part in a more gradual transition. The board does not publicize those plans. Doing so could prompt executives who are not the favorite to leave.

There are six key members of Dimon's management team who are often mentioned in discussions about succession. They range in age from 46 to 58, with the older executives seen as "hit by a truck" contenders, and younger ones thought to be potential CEOs-in-training.   Continued...

JP Morgan CEO Jamie Dimon speaks at an event at JP Morgan's corporate centre in Bournemouth, southern Britain, June 3, 2016. REUTERS/Dylan Martinez/File Photo