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When JPMorgan Chase chief executive Jamie Dimon starts unloading his $1.2bn of stock next year, the Wall Street titan — who has never previously sold stock — will join a parade of top bankers who have cashed in some of their holdings.
Dimon’s refusal to sell harks back to the era when his early mentor, Sandy Weill, dominated Wall Street and instigated a “blood oath” that required his management team to hold their shares until they left. JPMorgan itself has previously trumpeted the fact that Dimon had “not sold a single share of JPMorgan Chase common stock”.
Breaking that holding streak with the sale of 1mn shares, worth about $140mn, will catapult Dimon to the top of the table for stock sales by current US bank executives, a Financial Times analysis of data from VerityData, S&P Capital IQ and regulatory filings shows — even if other top bankers have proved far more willing to sell than the boss of America’s biggest bank.
Indeed, five of the other top-10 sellers among the current crop of executives at Wall Street’s big six banks are at JPMorgan.
Head of asset and wealth management Mary Erdoes has sold $63mn, and investment banking chief Daniel Pinto has cashed in $53mn since Dimon took the top job at the start of 2006. Other substantial sellers at the bank include commercial banking boss Douglas Petno, who has sold $34mn, and co-head of consumer banking Marianne Lake, who has sold $29mn. “They all hold at least 50 per cent of the shares they’ve been granted,” a JPMorgan spokesman said.
During the 17-year period in which Dimon has sold nothing, chief executives of rival banks have cashed out large chunks of stock.
James Gorman, Morgan Stanley’s CEO since 2010, has sold $78mn of his shares in the bank — including almost $48mn so far this year — making him the biggest seller among executives at the US’s six largest lenders. Ted Pick, who will succeed Gorman as chief executive in January, has cashed in $30mn, while his former rivals for the top job Dan Simkowitz and Andy Saperstein have sold $25mn and $19mn, respectively.
That puts the Morgan Stanley trio in a similar ballpark to Goldman Sachs chief executive David Solomon, who has sold almost $22mn since 2006. Goldman’s second-ranking executive John Waldron has offloaded $20mn in that time, while John Rogers, who served as the bank’s chief of staff until stepping back in August, has sold $34mn worth of stock.
In contrast, executives at Citigroup and Bank of America have sold paltry amounts of shares. Bank of America’s Brian Moynihan sold $1.9mn before becoming chief executive but none since; Citi chief executive Jane Fraser has also not sold since taking the top job.
Dimon is also rare in how much stock he holds compared with rival bank executives. “[He] is in a league of his own given the sheer magnitude of stock that he owns,” said Mike Mayo, a banking sector analyst at Wells Fargo.
The JPMorgan boss also bought about half of his shares in the bank personally in the open market, a spokesperson said. Gorman similarly bought 100,000 shares in Morgan Stanley in 2011; he sold the same amount of stock five years later.
Dimon, who is reducing his stake for “financial diversification and tax-planning purposes”, will still own more stock than any other current executive, with a holding that earns him tens of millions of dollars each year from dividends.
The only other banker who comes close to holding such a large stake in their bank is David Viniar, Goldman’s former chief financial officer who still sits on the lender’s board. Dimon holds 0.3 per cent of JPMorgan’s outstanding shares; Viniar, who became a partner at Goldman seven years before its initial public offering in 1999, holds 0.28 per cent after $75mn in share sales since 2006.
Gorman only holds 1mn of stock in Morgan Stanley, and Solomon has 140,000 shares in Goldman Sachs.
The FT’s analysis of executives’ current holdings does not include restricted stock awards or share options, which generally account for a substantial slice of annual pay. The current chief executives of the big six US banks have been paid more than $400mn in restricted stock over the past three years, figures from proxy advisory firm ISS show.
As the stock element of executives’ pay has increased relative to the cash portion, so has the incentive to liquidate some of those holdings.
“If you get paid $25mn, 50 per cent goes to taxes and 80 per cent is paid in stock,” said one longtime Wall Street executive. “Everyone can live on that but you’re still not accumulating liquid net worth.”
While chief executives’ stock sales draw attention, many of the largest sellers have been lesser-known lieutenants who might not face pressure to hold shares. Matthew Koder, Bank of America’s head of corporate and investment banking, sold $11.3mn in February 2023 alone. Goldman’s chief risk officer Brian Lee has sold $5.9mn over the past 12 months.
The FT’s analysis also only captures sales by board directors or executives who are still employed by the bank.
Lucian Bebchuk, a professor at Harvard, has argued for requirements that bank executives hold shares for several years after they are awarded by a bank.
In Dimon’s case, he has been working at JPMorgan for so long that he should be free to sell shares he accumulated a long time ago, Bebchuck said. “But with other bank executives, it is important to impose tighter restrictions on unloading of shares that we have at present.”
Additional reporting by Eva Xiao
Read the full article here
