Morning Coffee: Morning Coffee: JPMorgan’s praise for “talented” banker with $34.5m bonus. Leaving banking for kids books and the blues.
In the words of Benjamin Disraeli, “everyone loves flattery, and when it comes to Royalty, you should lay it on with a trowel”. Jamie Dimon isn’t quite royalty (although most estimates suggest he’s richer than they are), but it seems that on the occasion of awarding his performance-related bonus for 2023, the JPMorgan board decided that it a small bucket of effusive praise would go along well with the money.
“The firm is in a uniquely fortunate position to be led by such a highly talented and experienced executive who continues to grow the company, maintain market leadership positions, strengthen the firm’s reputation, invest in opportunities for the future, promote diversity and best practices, manage risk and develop great leaders, while also maintaining his focus on the firm’s clients”, according to the filing.
Well, there are worse people to flatter. Dimon’s total comp for the year looks big at $36m ($1.5m basic, $34.5m bonus; he’s not subject to the European cap regulations). And this is on top of another year’s accrual of his $52m “five year retention”deal from 2021, which got a few corporate governance types complaining. But in the scheme of things, it’s literally a rounding error; it’s 0.07% of JPM’s profit for 2023 and a little less than three basis points of the shareholder value generated by the 27% increase in the market capitalization over the year. Basically, if you attribute 99.9% of the bank’s performance to other factors and only 0.1% to Dimon’s leadership, the shareholders still got a good deal.
The thing is, of course, after having used superlatives like that, what do you do next year? It would be a nice problem to have, of course – if the stock performs, the board won’t mind the embarrassment of writing something like “the sun was seen for only half the day, but our dear leader shone all night too”.
On the other hand, the thing about winning streaks is that they come to an end, and 2024 might see new regulations on overdraft fees and capital requirements biting in to the business model that made Dimon’s reputation. Which might leave him pondering another old proverb – it's usually better to leave everyone wondering why you left, rather than wondering why you stayed.
At an investor relations event earlier in the year, Jamie confirmed that as long as he feels the same kind of “intensity”, he would be happy to continue. And the money is good, including that multi-year retention bonus. But one day, the attraction of retiring as the banking equivalent of an undefeated champion is going to call. And then it might be quite a shock to the system for the JPM shareholders and board to get used to using relatively measured language to describe the merely strong performance of a merely excellent CEO.
Elsewhere, when someone announces that they’re quitting banking to do something more interesting, you can usually hear an audible sigh reverberate across LinkedIn as everyone goes “great another boutique gin or organic skincare brand”.But in a very great break with industry tradition, we see two stories this week of bankers quitting to do something that is actually interesting and cool.
Marcus Satha is leaving the Citi short term interest rate trading team that he led to the global number one slot, in order to take a more active role with the charity he started in 2022. Inclusive Books For Children aims to “source expertly reviewed, high-quality books for children that reflect the diverse world in which they live”. Harry Potter and the Treasury Swaps Inversion will hopefully be arriving soon.
And Osman Malik has announced that he’s passing on the UBS real estate equity research team to his second-in-command, to concentrate on expanding the small blues club he bought during the pandemic (after “many years of playing guitar on its stage”) into a brand, record label, coffee shop and general global multimedia property.
Noticeably, both these exits seem to have been a few years in the development, with the banking job providing the cash flow to do them properly. And they’re both rooted in an actual authentic passion, rather than the all too typical banker’s next step of thinking “well what am I going to do now?”
The Jain Train might be a few carriages short – the predicted launch size for Jain Global Capital is now looking more like $5-6bn than $8-10bn. Which is still pretty impressive, but it won’t be the largest hedge fund launch ever in history. It seems that the well-known shortage of investment talent and some slightly variable returns across the second tier pod shops have led to “multistrategy fatigue”. (FT)
Citi is cutting 20 equity research jobs in Asia – only two in Hong Kong with the rest spread out across Korea, Australia and Japan. (Reuters)
Job cuts at Citi are being intermingled with some high profile departures in roles not necessarily being removed – Liu Li-Gang and Rob Hoffman are leaving the Asian wealth management business while several senior equities sales & trading executives have left in the US. (Bloomberg)
An interview with Venkat at Davos generated headlines saying he was going to “shrink the investment banking business”, but it’s quite clear from context that this mean “as a proportion of the bank, by growing the other business lines to catch up with it”. (WSJ)
More layoffs of former Credit Suisse Managing Directors from UBS, although by this point, surely anyone left must have been aware that something like this was on the way; it’s more likely that these represent decisions made and communicated months ago, as people finish projects and tidy up loose ends. (Financial News)
In case you missed it – the FT’s huge longread about the disastrous bromance between a French star fund manager and Lars Windhorst. (FT)
Hanging around in small towns in Denmark, putting weather forecasts through quant algorithms and sometimes making billions of dollars – the very weird world of short term electricity trading, which has become incredibly volatile now that power generation fluctuates with the wind and sun rather than being planned. (Bloomberg)
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