How would you evaluate the decisions of JP Morgan Chase Executive Comp Committee

Question

How would you evaluate the decisions of JP Morgan Chase Executive Comp Committee?

I would agree with the decision of the committee. At first when I read $ 20 million it seemed unfair. However, after reading that $18.5 million of the CEO's pay were in restricted stocks and could be cancelled by the board, it seemed like the right compensation package for a CEO who drove J.P Morgan Chase to $20 billion in fines and penalties. Since, the company uses a pay for performance approach, I would say that the restricted stocks clause sounds as Mr. Dimon is somewhat getting punished.

Which Stakeholders does this Committee support or serve?

This committee serves investors, shareholders and top-level management

How does this type of decision impact rank and file employees?

This type of decisions could impact lower-level employees’ morale and motivation because they could view it as the CEO is being rewarded despite having the company fined $20 billion. This situation could create confusion, decrease employees’ motivation and increase employees’ turnover. I think that the $20 million figure would be the figure employees would be stuck on and not the $18.5 million restricted stocks clause. Therefore, employees must be educated on what those decisions actually mean.

Respond to one of the questions in 250 words or less. Thank you!

Explanation / Answer

How would you evaluate the decisions of JP Morgan Chase Executive Comp Committee? It’s time to draw a line in the sand on poor compensation disclosure, including poor analysis of performance. The purpose of the board’s report should not be to produce a sales pitch to sell high CEO pay using whatever measures seem fit to that purpose. Instead, compensation committees ought to be laying out a disciplined, balanced analysis of what went well and what went badly during the previous year—and how they factored all of that into their executive compensation decisions. They also should be demonstrating that they understand a company’s financials at a deeper level Admittedly, hiring is one of the most challenging parts of building and growing a company. With all of the competitive offers available to top talent, attracting and maintaining a strong team is vital. You have to learn how to identify those people who will add to your organization instead of draining your resources Most boards and compensation consultants lack a clear framework for comparing a CEO’s and other executives’ roles and compensation across companies. Many boards have no grounding in designing effective accountability structures. In the absence of an objective framework for designing accountability and measuring work, many CEOs have defined their own role, accountabilities and level of authority. Thus, current compensation practices continue unabated. Designing an accountability structure that is effective and integrating it with executive compensation is the most powerful lever a board has to protect the financial interests of its shareholders. Given that accountants and compensation consultants who support the board compensation committee both have defecient measurement model, it is fair to say that executive pay is broken at the core

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