Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
JPMorgan chief executive Jamie Dimon will sell 1mn shares in the bank next year, the first time he has reduced his stake in the group since joining nearly two decades ago.
At current market prices, the sale would net Dimon more than $140mn, although he and his family would continue to own about 7.6mn shares. Including options, Dimon’s position in the group is worth $1.4bn.
In a regulatory filing, JPMorgan said the sale was for “financial diversification and tax-planning purposes”, adding that “Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant”.
The sale will raise questions about how long Wall Street’s longest-serving chief executive intends to stay on in the role. Dimon’s rival at Morgan Stanley, James Gorman, announced this week that he would step down as CEO at the end of the year. JPMorgan used to highlight the fact that Dimon had “not sold a single share of JPMorgan Chase common stock”.
A spokesperson for the bank said the sales had no connection to succession planning and that Dimon had “no plans to enter into another such sale but will of course consider his financial planning needs over time”.
The 67-year-old banker, who is also chair of JPMorgan, joined the group in 2004 when it bought Bank One. At the end of 2005 he was made chief executive of JPMorgan, and a year later he added the roles of chair and president.
By retaining company stock for the best part of two decades, Dimon has followed a tradition set by his former mentor at Citigroup, Sandy Weill, who instituted a “blood oath” among senior executives whereby they were forbidden from selling shares until they left.
Yet a Financial Times analysis of bank share sales in 2015 found the practice was not universal across Wall Street. Some executives sold tens of millions of dollars of stock in the years after the financial crisis.
Dimon has more than 2mn share options on top of his stock in the bank. Some of that came in the form of a “special award” in 2021, when the board granted Dimon 1.5mn stock appreciation rights in recognition of his “continuing, long-term stewardship of the firm, leadership continuity and management succession planning amid a highly competitive landscape for executive leadership talent”.
The stock appreciation rights awarded two years ago were a form of option that would become exercisable from July 2026, and Dimon would need to hold any shares until July 2031. However, the award was unpopular with shareholders.
During his time as chief executive, the bank’s shares have risen 250 per cent, giving the group a market capitalisation of $410bn. Dimon made a personal investment in the bank’s stock in 2016, when he bought half a million JPMorgan shares for just over $25mn. Since then, the stock price has increased by 160 per cent.
At JPMorgan’s investor day in May 2022, Dimon had touted JPMorgan shares after a promotional reel was played, saying “I would buy that stock”. At the time the bank’s shares were trading at about $120 apiece. They are now trading around $140.
Asked on a call with reporters months later if he had any plans to purchase more shares, Dimon said, “I already own plenty of stock. I do think the company is an exceptional company and well worth the price that it is today.”
Last month, Dimon warned recent proposals for new capital rules by US regulators risked making bank stocks uninvestable.
The bank said Dimon would use stock trading plans to sell his shares, in accordance with SEC rules.
Dimon was paid $34.5mn for 2022, unchanged from the year before.
Additional reporting by Brooke Masters
Read the full article here