Yahoo Finance What Can We Learn About JPMorgan Chase's (NYSE:JPM) CEO Compensation?
This article will reflect on the compensation paid to Jamie Dimon who has served as CEO of JPMorgan Chase & Co. (NYSE:JPM) since 2005. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for JPMorgan Chase.
See our latest analysis for JPMorgan Chase
Comparing JPMorgan Chase & Co.'s CEO Compensation With the industry
Our data indicates that JPMorgan Chase & Co. has a market capitalization of US$303b, and total annual CEO compensation was reported as US$32m for the year to December 2019. That's a modest increase of 5.3% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$13m. Accordingly, our analysis reveals that JPMorgan Chase & Co. pays Jamie Dimon north of the industry median. Moreover, Jamie Dimon also holds US$801m worth of JPMorgan Chase stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.5m | US$1.5m | 5% |
Other | US$30m | US$29m | 95% |
Total Compensation | US$32m | US$30m | 100% |
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. Investors may find it interesting that JPMorgan Chase paid a marginal salary to Jamie Dimon, over the past year, focusing on non-salary compensation instead. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
JPMorgan Chase & Co.'s Growth
Over the past three years, JPMorgan Chase & Co. has seen its earnings per share (EPS) grow by 3.1% per year. In the last year, its revenue is down 8.1%.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has JPMorgan Chase & Co. Been A Good Investment?
JPMorgan Chase & Co. has served shareholders reasonably well, with a total return of 18% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
JPMorgan Chase primarily uses non-salary benefits to reward its CEO. As we touched on above, JPMorgan Chase & Co. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.
Whatever your view on compensation, you might want to check if insiders are buying or selling JPMorgan Chase shares (free trial).
Important note: JPMorgan Chase is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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