JPMorgan Chase & Co. (JPM) announced that its board of directors has awarded Mr. Jamie Dimon, the Chairman and CEO, stocks and options worth $17.4 million for 2010. This represents about 22.5% increase from the amount he had received in 2009.
According to the filing with the Securities and Exchange Commission, JPMorgan’s board granted Mr. Dimon 251,415 restricted shares valued at about $12.1 million (based on the closing price of February 16) and 367,377 options/stock appreciation rights worth $5.3 million (based on Black-Scholes valuation method).
JPMorgan’s filing also stated that Mr. Dimon will receive half of the restricted shares in January 2013 and the other half in January 2014. Similarly, stock appreciation rights will have a term of 10 years and will be exercisable in five installments starting from January 2012. He might have also received a cash bonus for 2010 but this was not disclosed in the filing.
Apart from Mr. Dimon, JPMorgan also granted the company’s top executives nearly $73 million in restricted shares and stock options for their performance in 2010. This is higher than $64.2 million restricted shares and stock options granted in 2009.
JPMorgan has also included the “clawback” provision while granting these stock bonuses. As per this provision, these stock bonuses can be withdrawn from the underperforming employees. The clawback provision is an important part of the financial reforms that ensures that the short-term risks are avoided by the bankers.
In 2009, JPMorgan’s board had granted 195,704 restricted shares (valued at $7.95 million) and 563,562 options (worth $6.24 million) to Mr. Dimon. However, in 2008, he just drew a salary of $1 million and declined the cash bonuses.
Last month, Goldman Sachs Group Inc. (GS) awarded its Chairman and CEO, Mr. Lloyd Blankfein a stock bonus of $12.6 million and also hiked his salary to $2 million for 2011. Likewise, Mr. James Gorman, CEO of Morgan Stanley (MS) received a deferred stock and options worth $7.4 million for 2010.
However, Bank of America Corporation (BAC) is an exception in that respect. The company had announced that it will not hike the salaries of its top management in 2011 and will not grant any cash bonuses. Its CEO’s salary remains at $950,000 for 2011 but he may get up to $9.05 million in stock options if the company meets certain performance targets.
The hike in bonuses is an indicator that the banks are optimistic about their growth prospects and wish to reward their executives for their performance through the year.
JPMorgan currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Moreover, considering the company’s business model and fundamentals, we also maintain a long-term ‘Neutral’ recommendation on the stock.
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