Translated material
Far from the people
Bonus to the head of JP Morgan Chase & Co. will be paid in the form of shares and options and will not include cash. In 2007, Mr. Dimon received a record bonus of $27.8 million. According to bank spokesman Joseph Evangelisti, at the next shareholder meeting, the JP Morgan board will adopt the say-on-pay principle, expanding the rights of shareholders to reduce compensation for the company's senior management .
As you know, JP Morgan coped with the financial crisis better than other banks, becoming the second largest in the United States. In every quarter throughout the crisis, the bank consistently made a profit. Over the past year, its shares have risen 84%. At the end of the fourth quarter of last year, its net income reached $3.28 billion compared to $702 million a year earlier. Earnings per share were 74 cents, compared with the average analyst forecast of 60 cents. However, for the first time since the first quarter of 2008, the bank suffered losses in the retail business.
“This bonus is consistent with previous payment practices,” the Johnson Associates Inc. founder told Bloomberg. Alan Johnson. “We can say that Jamie Dimon’s bonuses could have been higher, but this is not the right year for such actions.”
US President Barack Obama has repeatedly called bankers' bonuses indecent (lately the owner of the White House has been using the expression “fat cats” more often). On Friday, White House Speaker Robert Gibbs said wages in the financial sector showed that bankers were out of touch with the rest of the people: "Wall Street seems to have forgotten that it is Main Street that has helped it survive" (that is, ordinary American citizens).
The CEOs of Goldman Sachs, Morgan Stanley and JP Morgan defended their companies' pay standards Jan. 13 during a hearing of the commission investigating the causes of the financial crisis. They said that paying bonuses to top managers in the form of company shares was in the interests of shareholders.
The largest US bank Bank of America Corp. will also pay most of the bonuses in the form of shares to its investment bankers. Total salaries for 2009 will be $4.4 billion. Bank of America's top executives are expected to receive bonuses of $5 million, and other top managers from $2.5 to $3 million.
BofA remains under significant public pressure. Late last week, New York State prosecutors filed civil fraud charges against Bank of America and its former executives. According to investigators, they misled investors before acquiring the investment bank Merrill Lynch early last year. Charges have been brought against former BofA chief executive Kenneth Lewis and former chief financial officer Joe Price. According to State Attorney Andrew Cuomo, the bank's management did not properly disclose information about the investment bank's losses and bonuses received by its employees and managers before finalizing the deal to purchase Merrill Lynch. According to him, “Bank of America’s actions were egregious and reprehensible” and as a result, “not only depositors were deceived, but also the authorities.”
BofA denies the allegations. Bank spokesman Robert Stickler said: “We are disappointed and regret that the New York City Attorney's Office has decided to bring these charges. The facts show that Bank of America and its executives, including Kenneth Lewis and Joe Price, have always acted with integrity.”
Kenneth Lewis left his post as head of the bank at the end of 2009, announcing his departure in September. He took this step to rid the company of excessive public and political pressure.