Worth It

Jamie Dimon Is Totally Underpaid

He weathered a barrage of investigations and $20 billion in fines—and still made a gigantic profit. This is no time to go cheap on the J.P. Morgan CEO.

Larry Downing/Reuters

The media is all aflutter about J.P. Morgan Chief Executive Jamie Dimon getting a 74 percent pay raise for 2013—$18.5 million worth of restricted stock versus the $10 million bonus from the year earlier, according to a government filing. This is on top of his $1.5 million base salary, which remained unchanged.

The reason why this is such a heated topic: In 2013 alone, Dimon’s bank has spent approximately $20 billion on fines, disgorgements, penalties, and legal fees to settle a galaxy of charges from government and regulatory bodies. Just this month, J.P. Morgan entered into an additional $2 billion settlement with the Justice Department for its role in the massive Bernie Madoff fraud. In addition to overlooking its own executives’ suspicions, J.P. Morgan served as banker to the Ponzi king— and even pulled its own money out a few months before the scam was revealed.

Other offenses, real or imagined, have been documented at length by journalists. From LIBOR rigging to market manipulation to systemically risky proprietary trading to mortgage fraud and abuse, there wasn’t a single financial shitstorm in the past seven years that the Goode Ship Morgan hadn’t found itself directly in the eye of.

And yet—and yet—not a single high-ranking employee of J.P. Morgan has ever been charged or prosecuted for their role in any of it. Meanwhile, the bank’s stock price is more than 20 percent above its peak from the pre-crisis period and profits are back at a record. The same cannot be said for national employment or standards of living, of course, but that’s not J.P. Morgan’s concern. As a publicly traded company, J.P. Morgan exists to serve the interests of its shareholders, then its employees and then its customers—mainly in that order.

In 2013, J.P. Morgan earned more than $18 billion. This is down from the $21 billion it earned in 2012, but keep in mind that this total is after $22 billion in legal costs and settlements were already factored in—and so the bank is much more profitable than you would think. Though J.P. Morgan’s revenue was down last year (this is what happens when you’re forced to jettison a bunch of businesses that run afoul of the new regulations), its share price rose by 30 percent. This bottom line is the board of directors’ main concern—and these are the same folks who approve Dimon’s compensation.

And so, those criticizing the pay package for the controversial banker-in-chief are largely getting things completely backward. Dimon has somehow managed to keep the firm intact and at record profits and market valuation despite his company being perhaps the absolute worst corporate actor of the era.

This ability to keep the bank together and in prime condition, regardless of myriad legal challenges and reputational horror shows, is an extraordinary thing to behold. Under a lesser CEO, God only knows what might have become of this company. Dimon’s shareholders, board members, and other stakeholders ought to be pleased to pay out any amount they can in order to keep him on.

Any chief executive who can steer their firm toward $18 billion in annual profits while under investigation by seven federal agencies, dozens of state regulators and two other foreign countries is surely worth many multiples of a measly $18 million. (Even Warren Buffett says so.) You might even make the case that Jamie Dimon is the most underpaid CEO in America.