This month, shareholders rejected a $84m pay package for JP Morgan CEO Jamie Dimon. At least 31% of shareholders agreed with the bank’s board that Dimon is a key person to the institution’s future. Thus, he deserved a jumbo pay package. This covers $52.6m in special options to keep his position for five more years. Dimon’s total compensation last year was $84.4m. Previously, he got $31.7m compensation in 2020.
Institutional Shareholder Services and Glass Lewis demanded shareholders to refuse the pay package and vote at the annual meeting. The shareholder advisory firms argue that they must cite a lack of Dimon’s performance criteria for package options and other things. Even without the advisors, shareholders are likely to reject the pay package. Dick Bove, Odeon Capital bank analysts said that Jamie Dimon is the most capable CEO that he has looked at in 55 years. But the sum shows that he is probably overpaid.
If the company and others ignore this vote there would be shareholders upheaval. It would force boards of directors to cut not only CEO pay but also others. He noted that the greatest gap between top executive pay compared to employees is a danger alarm for the U.S. economy. Bove added that the divergence in incomes is simply not healthy. The Gini Index, said Bove, in the country is the embarrassment of a nation under democracy and capitalism.
In more than a decade, JP Morgan won approval from 90% of votes cast in the annual compensation ballots. Despite the rejection, Dimon remains keeping the award. The vote somehow is not binding, it is the indication of the investors’ attitude for the executive pay. The grant focuses on the board’s desire for Jamie Dimon.