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    After $6b loss, JPMorgan cuts CEO pay

    But with $11.5m package he’s still richly rewarded

    Even with a pay cut, Jamie Dimon will make more than the median 2011 CEO pay. The bank’s latest quarterly earnings shot up 55 percent over a year earlier, to $5.3 billion.
    KAREN BLEIER/AFP Getty Images/File 2012
    Even with a pay cut, Jamie Dimon will make more than the median 2011 CEO pay. The bank’s latest quarterly earnings shot up 55 percent over a year earlier, to $5.3 billion.

    NEW YORK — America’s best-known banker is getting a big pay cut. JPMorgan Chase said Wednesday that it will dock the pay of CEO Jamie Dimon by more than half, to $11.5 million from $23 million.

    It’s the latest fallout from an embarrassing trading loss at the bank last year, one that ballooned to $6 billion. Its ripple effects have been numerous, forcing Dimon to appear contritely before Congress and putting the bank in the cross hairs of regulators and lawmakers.

    The pay cut did not come as a surprise on Wall Street. What set it apart was that it amounted to a reprimand of a chief executive who remains popular and well regarded, despite the stain of a trading loss Dimon once dismissed as a ‘‘tempest in a teapot.’’


    And even as it cut his pay, the board praised Dimon for responding ‘‘forcefully’’ to the trading loss, presiding over an overhaul of risk management, and booting out responsible executives. A task force report placed most of the blame on other executives and traders who have since left.

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    Compensation consultant James F. Reda was underwhelmed, though. He called the pay cut ‘‘ceremonial,’’ a way for the bank to do penance.

    ‘‘He doesn’t need the money,’’ Reda said. ‘‘He was probably very proactive in accepting this to keep people off his back.”

    Dimon’s job was never seriously in danger, and the pay cut has not changed that perception. Wall Street saw it less as an indictment and more as a sign of a commitment to taking the trading loss seriously.

    ‘‘It’s bitter medicine, but he swallowed it and is moving on,’’ said James Post, a corporate governance expert who teaches at Boston University. ‘‘I think that still leaves him in a very strong leadership position.”


    JPMorgan emerged from the financial crisis as one of the strongest US banks, a winner in a meltdown that forced others to their knees. Its blockbuster fourth-quarter earnings, released Wednesday, will almost certainly cement it as the most profitable US bank of 2012.

    Such accomplishments have made Dimon one of the best known, and most outspoken, bank leaders of his generation, even in a time of heightened scrutiny and public anger about the industry. Some of his peers have tried to stay under the radar, but he has spoken out against many new regulations — including some, the bank’s critics say, that could have prevented the trading loss.

    Dimon has chafed at criticism of banking’s big pay packages, including President Obama’s famous ‘‘fat-cat bankers’’ comment. ‘‘Acting like everyone who’s been successful is bad and because you are rich, you are bad — I don’t understand it, I don’t get it,’’ he told an investment conference.

    Asked for thoughts on his pay cut, Dimon said he respected the board’s decision. Pressed for his ‘‘gut feeling,’’ he replied, ‘‘Nope, you’re not gonna get it.’’

    When analyst Guy Moszkowski asked about the ‘‘exotic investment strategies’’ of the Chief Investment Office, where the loss occurred, he shot back, ‘‘It has got not a damned thing to do with exotic investment strategies — zero, nada, nothing. OK?’’


    For 2012, Dimon will get $1.5 million in salary and $10 million in restricted stock awards. It probably means he will no longer be the highest-paid CEO at the country’s six mega-banks.

    Even with a pay cut, Dimon, 56, will be well paid. Median pay for CEOs of S&P 500 companies in 2011 was $9.6 million, Equilar says.

    Dimon is eager to put the loss behind him.

    But the bank has received requests for information from Congress, the Department of Justice, Securities and Exchange Commission, Commodity Futures Trading Commission, UK Financial Services Authority, Commonwealth of Massachusetts, and others.