Jpmorgan CEO’S extra $1.4m payout hangs on Fed decision

JPMorgan Chase & Co Chief Executive Officer Jamie Dimon personally stands to miss out on about $1.39 million a year if the Federal Reserve decides last week’s stress-test results don’t justify a dividend increase.

That’s how much extra income Dimon could get from his stake of about 6 million shares if his New York-based bank raises its payout as much as analysts predict. The sum dwarfs the combined $73,300 of new annual dividends at stake for his CEO peers at Bank of America Corp., Goldman Sachs Group Inc (GS) and Wells Fargo (WFC) & Co.

James “Jamie” Dimon, chief executive officer of JPMorgan Chase & Co., would get his extra $1.39 million if JPMorgan raises its quarterly payout from the current 30 cents to 36 cents, the average estimate of 14 analysts surveyed.

Bankers will find out whether they get any boost tomorrow when the Fed announces which capital plans at the 18 largest US lenders won approval. Regulators have pressed firms since the 2008 credit crisis to give executives more stock and less cash to align their interests with those of shareholders. CEOs are poised to get a windfall if payouts increase and shares rise — or to suffer with their investors if results sputter.

“There’s a very clear message in last week’s stress test that the banks are going to have to raise capital, particularly the largest banks,” said Nancy Bush, an analyst and contributing editor at SNL Financial LC, a bank-research firm in Charlottesville, Virginia. “They will be able to raise their dividends, but not in any kind of an aggressive fashion.” Banks are required to pass stress tests run by the Fed and submit capital plans that include any changes in dividends or stock-buyback programs. The four lenders haven’t disclosed how big a raise they’re seeking, while New Yorkbased Citigroup Inc. (C) and Morgan Stanley (MS) have said they didn’t ask for increases.

Dimon would get his

extra $1.39 million if JPMorgan raises its quarterly payout from the current 30 cents to 36 cents, the average estimate of 14 analysts surveyed. He could reap as much as $2.3 million extra a year if the dividend hits 40 cents, the high end of the range from three analysts who follow JPMorgan, the largest US bank by assets.

Using the average forecast, the new dividend would deliver $8.3 million in annual income to Dimon, 57, and his wife, who own about 5.78 million shares of the New York-based lender’s common stock, according to his latest regulatory filing. That’s on top of his $11.5 million compensation package, which included a $1.5 million salary. Every 1-cent increase in JPMorgan’s dividend is worth about $38 million to the bank’s shareholders.

Bank of America CEO Brian T. Moynihan, 53, would forgo $36,932 from his 485,950 shares, and possibly as much as $77,752, if the lender can’t raise its quarterly payout from 1 cent. That’s where the dividend has been stuck since the Charlotte, North Carolina-based firm was bailed out during the financial crisis.

The average estimate from analysts for the new dividend is 0.029 cents, with a maximum of 5 cents. An increase would repair some of the damage to the bank’s reputation from the 2011 stress tests, when Moynihan came under fire for raising expectations of a higher dividend before being blocked by regulators. Lloyd Blankfein, 58, would receive an extra $17,292 if the new Goldman Sachs dividend matches the average estimate of 0.502, little changed from the current 50 cents. At the top estimate of 52 cents, Blankfein could get $172,917 from his almost 2.2 million shares of the New York-based firm.

For John Stumpf at San Francisco-based Wells Fargo, who owns 956,038 shares, a new dividend matching the average estimate of 0.255 cents would earn him an extra $19,121. The current payout is 25 cents. The highest estimate of a 30-cent dividend would add $191,208 a year to Stumpf’s wallet.

Spokesmen for the four banks declined to comment on the stakes in relation to dividend increases. Top bankers including Blankfein, Dimon and Stumpf have additional equity stakes in their companies through stock options or restricted stock units granted in compensation packages that weren’t included in the calculations.

Any income boost will be tempered by higher federal taxes that took effect this year. Congress increased the maximum levy on qualified dividends Jan. 1 to as much as 23.8 per cent for high earners, including a tax tied to the new national health- care program, from 15 per cent in 2012.—