It was another big year for J.P. Morgan Chase, even after losing $6 billion in the disastrous "London Whale" fiasco last spring. Earlier this morning, the banking giant announced net earnings of $21.3 billion for 2012, a record profit, even with the gigantic losses from an unfortunate series of bets made by Bruno Iksil, a trader in the company's Chief Investment Office. The company is also facing a regulatory investigation, for failure to adequately handle risk management, disclosure of their positions, and possibly some faulty accounting.
Unfortunately, someone had to pay the price for that debacle. And that someone was CEO James Dimon, who saw his annual bonus slashed to a measly $10 million, a 53.5-percent reduction from the year before. In addition, Dimon will have to wait 18 months to vest 2 million stock options that were awarded to him in a previous bonus payout back in 2008. (They'd be worth about $13 million to him right now, based on today's stock price.) Don't worry. He still gets his $1.5 million annual base salary.
The company's announcement even scolded the boss for the "Whale" incident, saying "Mr. Dimon bears ultimate responsibility for the failures that led to the losses in CIO and has accepted responsibility." Three executives, including Iksil and his boss, Ina Drew, were let go by the company last year because of the trades. Judging by their financial statements, however, both the bank and its CEO have easily withstood both the financial damage and the public relations nightmare that ensued.
Of course, none of this accounts for Dimon's own personal investment in his company, which is substantial. Last summer, he used his own money to buy around $17 million worth of shares as a vote confidence in J.P. Morgan. Depending on the exact moment he bought in, the stock is up about $11-to-$12 a share since that purchase, as of today's opening price. Everything's going to be okay.
- Investment & Company Information