Frankie Volpicello

Professor Moore
Human Resource Management
CEO Compensation Assignment
Introduction:
JPMorgan Chase & Co. is a financial holding company that provides financial and
investment banking services. JPMorgan Chase & Co is one of the oldest financial institutions in
the United States. With a history dating back to over 200 years ago. Incorporated on October 28,
1968 as a financial holding company. (JPMorgan Chase & Co (JPM.N) Company Profile |
Reuters.com) Headquartered in New York, NY. ("JPM.") The company offers a range of
investment banking products and services in all of the major capital markets, in the world
including advising on corporate strategy and structure, capital-raising in equity and debt markets,
sophisticated risk management, market-making in cash securities and derivative instruments,
prime brokerage and research. ("JPM.") They also offer investment banking, financial services
for consumers, small business and commercial banking, financial transaction processing, asset
management and private equity. The company operates its business through a series of the
following divisions: Consumer and Community Banking, Corporate and Investment Bank,
Commercial Banking, Asset Management, and Global Finance & Treasury. ("JPM.")
The Consumer and Community Banking division serves consumers and businesses
through personal service at bank branches and through ATMs, online, mobile and telephone
banking. ("JPM.") Also it is organized into Consumer and Business Banking, Mortgage Banking
also including Mortgage Production, Mortgage Servicing and Real Estate Portfolios and Card,

Merchant Services and Auto Card. ("JPM.") The Consumer and Business banking division offers
deposit and investment products and services to consumers, and lending, deposit, and cash
management and payment resolutions to small businesses. The Mortgage Banking division
includes mortgage commencement and servicing activities, as well as portfolios that includes
residential mortgages and home equity loans, including the purchased credit reduced portfolio
that is acquired in the Washington Mutual transaction. ("JPM.")
The Card issues division provides credit cards to customers and small businesses, also
provides payment services to corporate and public sector clients through its commercial card
products, offers payment processing services to merchants, and provides auto and student loan
services. ("JPM.") The Corporate and Investment Bank division offers a broad range of
investment banking, market making, prime brokerage, and treasury and securities products and
services to a global cliental base that includes corporations, investors, financial institutions,
government and municipal entities. This division provides a full range of investment banking
products and services in all the major capital markets, including advising on corporate strategy
and structure, capital-raising in equity and debt markets, as well as loan origination and
syndication. ("JPM.")
The Commercial Banking division provides extensive industry knowledge, local
expertise and dedicated service to U.S. and U.S. multinational clients that includes corporations,
municipalities, financial institutions and non-profit entities. ("JPM.") This division provides
financing to real estate investors as well as owners. It also provides comprehensive financial
solutions, that includes lending, treasury services, investment banking and asset management to
meet their client's domestic and international financial desires. ("JPM.")

The Asset Management division provides investment and wealth management services.
This division offers investment management to all the main asset services that includes equities,
fixed income, alternatives and money market funds. ("JPM.") It also offers multi-asset
investment management, by providing new solutions to a wide spectrum of clients investment
desires. For individual investors this division provides retirement products and services,
brokerage and banking services, including trust and estate, loans, mortgages and deposits.
("JPM.")
The Global Finance & Treasury division of the company provides finance and capital
management and strategy. ("JPM.") This division provides the information, analysis and
recommendations to provide a clear strategic direction for business decisions to put them in the
right direction if needed, expense and capital discipline, enhanced controls, increased automation
and transparency. Overall, the company provides as vast spectrum of series to its customers.
("JPM.")
JPMorgan Chase & Co has no current issues that they are facing. The last issue they had
to deal with was the cyber-attack this summer. It compromised the accounts of 76 million
households as well as seven million small businesses, which is among the largest ever cyberattack. (JPMorgan Chase Hacking Affects 76 Million Households)
A cyber-attack this summer on JPMorgan Chase compromised the accounts of 76 million
households and seven million small businesses, a tally that dwarfs previous estimates by the
bank and puts the intrusion among the largest ever. (JPMorgan Chase Hacking Affects 76 Million
Households) The reason why this attack was so harmful was because the hackers obtained a list
of the applications and programs that run on JPMorgans computers. By this the hackers will see

where their vulnerabilities are in each of the programs and also in the web application in each
program and web application. (JPMorgan Chase Hacking Affects 76 Million Households)
Due to JPMorgan doing business overseas the hackers gained access to the names,
addresses, phone numbers and emails of JPMorgan account holders. There was no sign of any
information including Social Security numbers or any type of passwords that had been stolen.
And there was no evidence of fraud. The initial discovery of the hack scared Wall Street because
it wasnt sure whether or not this could affect more than JPMorgan. By this scare occurring, there
was an investigation by the Federal Bureau of Investigation. (JPMorgan Chase Hacking Affects
76 Million Households)The bank was forced to update its regulators, including the Federal
Reserve, on the extent of the scare. Due to all this happening, the company was faces to take
action. They were faced with the rising threat of online crime which they got affected by and
JPMorgan has said they plan to spend $250 million on digital security annually to keep safe and
make sure that this will not ever happen again. (JPMorgan Chase Hacking Affects 76 Million
Households)
Current issues that the industry are facing are that banks are being put on the Problem
Bank List. This list contains the names of institutions that are expected to have weak capital
positions that can lead to failure, and them closing. The names of the banks are kept private due
to the FDIC doesnt want people cashing out as fast as they can. ("Problem Bank List.")
The unofficial Problem Bank List currently had a total of 408 institutions compared to a
total of 329 on the official FDIC confidential Problem Bank List. The ending week in November
7, 2014, there was one bank failure. ("Problem Bank List.") A total of 17 banks have failed so
far during 2014. The cost to the FDIC Deposit Insurance Fund for the 2014 banking failures
currently totals to be $392.9 million. The 17 banks that failed had total assets of $3.1 billion. To

fix this issue banks have to fix their management, and see their history and what went wrong and
change it. If in a situation arises, the FDIC has the authority to borrow up to $500 billion from
the Treasury with the consent of both the Federal Reserve and the Treasury Department.
("Problem Bank List.")
James Dimon became the Chairman of the Board on December 31, of 2006 and he has
been the Chief Executive Officer and President since December 31, of 2005. He was the
President and Chief Operating Officer succeeding JPMorgan Chase's merger with Bank One
Corporation in July of 2004. ("Members of the Board.") At Bank One he was the Chairman and
Chief Executive Officer from March of 2000 to July of 2004. Before Mr. Dimon joined Bank
One, he held a wide range of executive roles at Citigroup Inc., the Travelers Group, the
Commercial Credit Company and American Express Company. ("Members of the Board.")
As well, Mr. Dimon is on the Board of Directors of the Harvard Business School as well
he is a member of The Business Council. Mr. Dimon is on the Board of Trustees of New York
University School of Medicine. ("Members of the Board.")Mr. Dimon does not serve on the
board of any publicly traded company besides the one he works for which is JPMorgan Chase.
Going into Mr. Dimons education, he graduated from Tufts University in and received 1978 and
he earned an M.B.A. from Harvard Business School in 1982. ("Members of the Board.") Going
into Mr. Dimons personal life, he was born on March 13, 1956, in New York City, New York.
Going into his family, Mr. Dimon is the son of Theodore Dimon who was a stock broker and Mr.
Dimons mother was Themis whose maiden name is unknown. Mr. Dimon is married to Judith
Kent and they have three children Julia, Laura, and Kara Leigh. Currently the Dimons reside on
270 Park Avenue, New York, New York. ("Reference for Business.")

Data:
Table 1: Comparison of Company Financial Data
Table Source: http://www.nasdaq.com/symbol/financials

Data

JPMorgan Chase &

Co.
Ticker Symbol: (JPM)

Bank of America
Corporation
Ticker Symbol: (BAC)

Citigroup Inc.
Ticker Symbol: (C)

Revenue ($mil) 2013

Revenue ($mil) 2012
Revenue ($mil) 2011

96,381.0
91,658.0
89,660.0

26,634
26,893
32,620

17,600
15,767
17,669

Net Income ($mil)

2013
Net Income ($mil)
2012
Net Income ($mil)
2011

17,923.0

11,431.00

13,673.00

21,284.0

4,188.00

7,541.00

18,976.0

1,446.00

11,067.00

Dividend per share

2013
Dividend per share
2012
Dividend per share
2011

1.44

0.04

0.04

1.2

0.04

0.04

0.04

0.03

Total Assets 2013

Total Assets 2012
Total Assets 2011

2,415,689.0
2,359,141.0
2,265,792.0

2,102,273.00
2,209,974.00
2,129,046.00

1,880,382.00
1,864,660.00
1,873,878.00

Number of
employees 2014

242.39K

229.54k

243k

Rank in Fortune 500

18

21

26

Above you will see the comparions of the three Companies revuenue, net income,
divdende per share, and their totals assets from the years 2011 to 2013. Also provided is the
number of emplyess they current have in 2014 and the companies rank in the Forutne 500.

Table 2: Stock Comparison

Source: Google Finance: Stock market quotes, news, currency conversions & more

The chart above represents the comparisons of the different companies stock performance
over the past four years. The vertical axes represents the price and the varying change in the
price of stock. While the horizonatal axes represents the time elapsed from 2010 through 2014.
The different charted lines indicate the different companies. For example, the blue line represents
JPMorgan, the organge line represents Bank of America, the red line reprents Citigroup and the
green line represents the Standard & Poor's 500. The frequency in which each company
perfomed was different. As you can see each companies performance was different. The most
sucseful was the Standard & Poor's 500. Following that was JPMorgan. Some other information I

notied by looking at this chart was that in 2011 Citigroups stock price plummeted compared to
2011 Pay Elements

James Dimon
( JPM )

Michael
Corbat ( C )

Salary

$1,500,000

$1,500,000

Brian T.
Moynihan
( BAC )
$1,454,167

Bonus

$0

$5,200,000

$0

Value of Stock Awards

$10,000,000

$7,915,912

$11,142,643

Value of Stock Option Awards

$0

$0

$0

Non- Equity Incentive Plan

Compensation

$0

$2,923,069

$0

Change in pension Value and NonQualified Deferred Compensation

Earnings

$0

$3,838

$44,796

All Others*

$291,833

$15,300

$497,751

SEC total compensation

11,791,833

17,558,119

13,139,357

all the other companines reprssented.

Table 3: CEO Pay Comparison
Source: http://www.AFLCIO.org

Source: http://www.investopedia.com/
The chart above indicates how much money is given to each of the CEOs. The chart
shows how much money they make for a salary, what thieri bonus is, the value of their stock
awards, the value of their stock option awards, their Non- Equity Incentive Plan Compensation,
the Change in pension Value and Non- Qualified Deferred Compensation Earnings they earn and
all others. All other types of compensation can insist on the following, use of the company jet,
the use of the compay car, the use of secitriy, and whatever else the CEO feels He/She needs to
help them run the company. As well, at the and of my chart it shows their total compensation.
Thius means, their total as a whole. How much money they made, the price of their perks they
got to use such as for example the use of the company jet, and all others they got to beneiti them.
The SEC ( secitries and echnage commsion) keeps track on how much the CEOs get. They tally
up all the company expenses they use and all the other befnitds they get and show the public the
number for instance.
Terms for CEO/Executive Pay
Salary: The amount of money that is paid out to the CEO for the fiscal year.
Bonus: The additional money that is paid out to the CEO for the fiscal year, most of the time
based on CEO performance of that year.
Value of Stock Awards: is a grant of company stock. Most of the time the CEO is subject to
restrictions, such as for example being unable to sell or transfer the stock for a specified period
of time. Under some of the plans the CEO may lose the stock award if employment is
terminated during the restricted period. This is to keep the CEO. This period of restriction is
called a vesting period. Once the vesting requirements are done an employee owns the shares and

may treat them as she would any other share of stock in her account. The value of these vested
stock awards is the value they have on the date of the grant.
Value of Stock Option Awards: Stock option awards are given to an executive so that they have
the right to purchase company stock in the future at a predetermined price if they choose. This is
known as a strike or exercise price. Typically, stock options become exercisable or
vested at amazed intervals and expire after five or ten years. The value of these stock option
awards all depended on the stock price the day they are exercised. These stock options are only
worth something if the market price of the companys stock exceeds the strike price of the
option. Such as for explain if an executive is given 100 stock options at a strike price of $10 a
share, and the market price is $20 a share, then the executive could buy 100 shares at $10 a
share, collecting the $10 difference between the strike price and the market price for each share
or a total of $1000. If the market price of the shares is less than the strike price then the stock
option will have no value.
Non-Equity Incentive Plan Compensation: This is compensation that is earned through nonequity or cash for example for an incentive plan for the CEO. This may include awards that are
not stock or equity. The Incentive plans generally provide for compensation that is intended to
serve as an incentive for performance to occur over a specified period for the CEO to work
harder to reach a goal for example.
Change in Pension Value and Non-Qualified Deferred Compensation Earnings: This is the
increase in actuarial value to the CEO of all defined benefit and earnings on non-qualified
deferred compensation over the past year. This could be an addition to a savings plan or even a
retirement plan for the CEO.

All others: The value of perks and other benefits provided to the CEO. This could include
personal use of company cars and private jets, country club memberships, tax reimbursements,
insurance plans or payments to saving plans. This is what is consisted in the "other annual
compensation" and "all other compensation" as reported by the SEC.
Conclusions:
U.S. CEO pay pratices are under attack because people belviev they are being paid way
too much money. Reffering to my article I found on Forbes website called Is The End Of
Gigantic, Unfair, And Absurd CEO Pay Near? the auricle goes in depth on why CEO pay is
under attack and they earn the money crazy amounts they do. I quoute here Way back in 1986
the top 10 on the Forbes list of the highest-paid CEOs earned in aggregate $57.88 million and the
top-paid corporate chieftain was Chryslers legendary Lee Iacocca at $11.50 million. Leap ahead
to the 2012 Forbes list and the highest paid 10 earned a whopping $616.40 million in total, or
10.65 times the amount of the class of 1986. This quote explains in a nutshell just how crazy the
amount they make is. Back in 1986 within the top ten on Forbes the C.E.O made $57.88 million
and speed it ahead to 2012 the numbers only increased. On the top ten on Forbes in 2012 the
highest paid C.E.O was $616.40 million, about 10.65 times the amount of the class of 1986.
People are criticizing the amount of compensation being awarded to CEOs because they feel
that the figures they earn are too high. In my other article I read it talks about the relation to the
average worker compared to these high paid CEOs. I quoute here from the article During the
1970s, the late management theorist Peter Drucker recommended that 20 times average worker
pay was an appropriate upside ceiling for top executive compensation. Today, CEOs at S&P 500
firms are more likely to be paid more than 200 times what a typical worker earns. The following
quote exmplains how mnay times more the CEOs make compared to the avergage weorker back

in the 1970s. And then it talks about how much more the CEOs make compared to the avrge
worker today. What I think about this subject is that I feel that they are paid the correct amount.
In my article I read called More Transparency, More Pay for C.E.O.s from The New York
Times The article I chose talks about how the C.E.Os of companies should be paid more. I agree
with the article attached for many reason. One being that, the C.E.O works the hardest in most
cases. He/She is the brains behind the entire company. Without them, the company can fail. They
need executives to be able to steer the company in the right direction. I believe that they should
be paid these ridiculous amounts of money because they earn it. People sometimes argue that
they get paid so much and they compare themselves to them. And that is the problem you cannot
compare a C.E.O to the average Joe. They are both completely different calibers suited for
different tasks. Overall, I agree that they should be paid all that money. My overall reflection on
this exerisse was that I leanred a lot more about CEOs and how much they really made. I always
knew that they made a lot of money but never knew it was that much. I ejoyed this exsrise and i
learned a lot.

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