o | Preliminary Proxy Statement |
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DATE | Tuesday, May 16, 2017 | |||
TIME | 10:00 a.m. Eastern Time | |||
PLACE | JPMorgan Chase & Co. Delaware Technology Center 880 Powder Mill Road Wilmington, Delaware 19803 | |||
MATTERS TO BE | l | Election of directors | ||
VOTED ON | l | Advisory resolution to approve executive compensation | ||
l | Ratification of PricewaterhouseCoopers LLP as our independent registered public | |||
accounting firm for 2017 | ||||
l | Advisory vote on frequency of advisory resolution to approve executive compensation | |||
l | Shareholder proposals, if they are introduced at the meeting | |||
l | Any other matters that may properly be brought before the meeting | |||
By order of the Board of Directors | ||||
Molly Carpenter | ||||
Secretary | ||||
April 5, 2017 |
MATTERS TO BE VOTED ON |
ü | MANAGEMENT PROPOSALS | |
The Board of Directors recommends you vote FOR each director nominee and FOR the following proposals (for more information see page referenced): | ||
1. Election of directors | ||
2. Advisory resolution to approve executive compensation | ||
3. Ratification of PricewaterhouseCoopers LLP as the Firm’s independent registered public accounting firm | ||
The Board of Directors recommends you select "One Year" on the frequency of the advisory resolution to approve executive compensation (for more information see page referenced): | ||
4. Advisory vote on frequency of advisory resolution to approve executive compensation | ||
û | SHAREHOLDER PROPOSALS (if they are introduced at the meeting) | |
The Board of Directors recommends you vote AGAINST each of the following shareholder proposals (for more information see page referenced): | ||
5. Independent board chairman | ||
6. Vesting for government service | ||
7. Clawback amendment | ||
8. Gender pay equity | ||
9. How votes are counted | ||
10. Special shareowner meetings |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 1 |
The Board has nominated 12 directors: 11 independent directors and the CEO | ||||||||||
NOMINEE | AGE | PRINCIPAL OCCUPATION | DIRECTOR of JPMORGAN CHASE SINCE1 | OTHER PUBLIC COMPANY BOARDS (#) | COMMITTEE MEMBERSHIP2 | |||||
Linda B. Bammann | 61 | Retired Deputy Head of Risk Management of JPMorgan Chase & Co.3 | 2013 | 0 | Directors’ Risk Policy (Chair) | |||||
James A. Bell | 68 | Retired Executive Vice President of The Boeing Company | 2011 | 3 | Audit (Chair) | |||||
Crandall C. Bowles | 69 | Chairman Emeritus of The Springs Company | 2006 | 1 | Audit; Public Responsibility (Chair) | |||||
Stephen B. Burke | 58 | Chief Executive Officer of NBCUniversal, LLC | 2004 | 1 | Compensation & Management Development; Corporate Governance & Nominating | |||||
Todd A. Combs | 46 | Investment Officer at Berkshire Hathaway Inc. | 2016 | 0 | Directors’ Risk Policy; Public Responsibility | |||||
James S. Crown | 63 | President of Henry Crown and Company | 2004 | 1 | Directors’ Risk Policy | |||||
James Dimon | 61 | Chairman and Chief Executive Officer of JPMorgan Chase & Co. | 2004 | 0 | ||||||
Timothy P. Flynn | 60 | Retired Chairman and Chief Executive Officer of KPMG | 2012 | 3 | Audit; Public Responsibility | |||||
Laban P. Jackson, Jr. | 74 | Chairman and Chief Executive Officer of Clear Creek Properties, Inc. | 2004 | 0 | Audit | |||||
Michael A. Neal | 64 | Retired Vice Chairman of General Electric Company and Retired Chairman and Chief Executive Officer of GE Capital | 2014 | 0 | Directors’ Risk Policy | |||||
Lee R. Raymond (Lead Independent Director) | 78 | Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation | 2001 | 0 | Compensation & Management Development (Chair); Corporate Governance & Nominating | |||||
William C. Weldon | 68 | Retired Chairman and Chief Executive Officer of Johnson & Johnson | 2005 | 2 | Compensation & Management Development; Corporate Governance & Nominating (Chair) |
1 | Director of a heritage company of the Firm as follows: Bank One Corporation: Mr. Burke (2003-2004), Mr. Crown (1996-2004), Mr. Dimon, Chairman of the Board (2000-2004), and Mr. Jackson (1993-2004); First Chicago Corp.: Mr. Crown (1991-1996); and J.P. Morgan & Co. Incorporated: Mr. Raymond (1987-2000). |
2 | Principal standing committees. In March 2017, Ms. Bammann became Chair of the Directors’ Risk Policy Committee and stepped down from the Public Responsibility Committee; Mr. Bell became Chair of the Audit Committee; Mr. Combs joined the Directors’ Risk Policy Committee and the Public Responsibility Committee; and Mr. Flynn joined the Audit Committee and stepped down from the Directors’ Risk Policy Committee. |
3 | Retired from JPMorgan Chase & Co. in 2005 |
2 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
NOTABLE CHANGES SINCE 2016 ANNUAL MEETING | ||||
Board Refreshment | Board Committee Rotation | Environmental, Social & Governance ("ESG") | ||
• Todd A. Combs elected in September 2016 • Since May 2011, five independent directors have joined the Board, each bringing a unique set of skills and experience • Board believes refreshment of directors is integral to an effective governance structure | • In January 2017, Board approved changes to Audit and Risk Policy committees • Audit: Mr. Bell became Chair and Mr. Flynn joined the committee • Risk Policy: Ms. Bammann became Chair and Mr. Combs joined the committee | • We published a dedicated ESG Report last year, updating many topics from 2014’s “How We Do Business – The Report” • Next edition expected to be published in Spring 2017 • We are committed to providing information on how we leverage our resources and capabilities to solve pressing ESG challenges | ||
STRONG 2016 PERFORMANCE CONTINUES TO SUPPORT SUSTAINED SHAREHOLDER VALUE | ||||
JPMorgan Chase & Co. delivered return on tangible common equity (“ROTCE”)1 of 13%, achieved record net income and record earnings per share (“EPS”), gained market share in almost all of our businesses, and continued to deliver sustained shareholder value over an extended period of time. |
SUSTAINED SHAREHOLDER VALUE ("TSR")2 |
1 | Return on tangible common equity (“ROTCE”) and tangible book value per share (“TBVPS”) are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. On a comparable GAAP basis for 2016, return on equity (“ROE”) was 10% and book value per share (“BVPS”) was $64.06. |
2 | Total shareholder return assumes reinvestment of dividends |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 3 |
WE MAINTAIN FORTRESS OPERATING PRINCIPLES WITH FOCUS ON CAPITAL, LIQUIDITY, RISK, CONTROLS AND CULTURE | |||||||
• We maintained our fortress balance sheet, growing our Basel III Advanced Fully Phased-In common equity Tier 1 (“CET1”) capital ratio1 by 60 bps to 12.2% and maintaining $524 billion of high quality liquid assets. • We continued to strengthen and reinforce our culture and business principles. The culture and conduct program is a key priority for every line of business and function. • We have embedded our business principles throughout the employee life cycle, starting with the recruiting and onboarding process and extending to training, compensation, promoting and disciplining employees. • We have invested significantly in our control environment including a control headcount of 43,000 professionals with a control spend of approximately $8 billion. | |||||||
WE ARE COMMITTED TO GOOD CORPORATE GOVERNANCE AND ARE ENGAGED WITH OUR SHAREHOLDERS | |||||||
The Board maintains a robust Lead Independent Director role and is committed to sound and commonsense governance principles. Our Board has endorsed the Shareholder Director Exchange (SDX) Protocol as a guide for engagement. | RECENT UPDATES | ||||||
GOVERNANCE | |||||||
Our engagement process, and the feedback gained from it, was a significant factor in the Board’s continued effort to appoint new directors as well as rotate directors across key committees. | |||||||
COMPENSATION | |||||||
In 2016, our shareholder engagement initiatives included: Shareholder Outreach: More than 90 discussions on strategy, financial performance, governance, compensation, and environmental & social issues with shareholders representing over 40% of our shares Annual Investor Day: Senior management gave presentations at our annual Investor Day on strategy and financial performance Meetings/Conferences: Senior management hosted more than 60 investor meetings and presented at 12 investor conferences Annual Meeting: Our CEO and Lead Independent Director presented to shareholders at the Firm’s annual meeting | In response to a strong say-on-pay vote last year (92% support) and positive shareholder feedback, for our 2016 pay program we maintained the changes that were made in 2015, including: | ||||||
PSU Program | CEO Pay Mix | Clawback Policy | |||||
Forward looking equity with payout formulaically determined based on both absolute and relative ROTCE performance | Smaller portion of variable compensation in cash, with 100% of equity in the form of at-risk PSUs | Increased transparency by disclosing whether any clawbacks have taken place for senior executive officers | |||||
In addition to the above, other aspects of our pay program continue to be aligned with the interest of shareholders, including: • Holistic assessment of performance in determining variable pay award levels while using a formula to determine PSU value at vesting • Strong stock ownership guidelines and retention requirements • No special executive benefits/severance or golden parachutes • Rigorous process to review risk and control which may impact compensation pools and individual pay • Strong cancellation and clawback provisions cover both cash and equity awards | |||||||
1 | The CET1 capital ratio under the Basel III Fully Phased-In capital rules is considered a key regulatory capital measure. For more information, see Notes on key performance measures on page 102. |
4 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
MR. DIMON’S 2016 COMPENSATION IS ALIGNED WITH HIS MULTI-YEAR PERFORMANCE |
I. | Business results: During 2016, the Firm again achieved record net income and record EPS, while generating strong ROTCE results of 13%1 on average tangible common equity of $180 billion1 (vs. $170 billion in 2015). |
II. | Risk and Control: The Board also recognized that Mr. Dimon deployed substantial resources to fortify our control environment, which has led to a control infrastructure that better permeates across and deeply within our businesses. Mr. Dimon has fostered a culture that seeks continuous improvement and regards the risk and control agenda as a top priority, which reflects the Firm's ability to successfully adapt to an evolving regulatory landscape. |
III. | Customers and Clients: Mr. Dimon has guided the Firm’s focus on creating and enhancing services that add value to our customers and clients through product innovation, cutting edge technologies, and simplified processes. |
IV. | People and Leadership: Mr. Dimon’s stewardship over the Firm’s People and Leadership agenda, has led to a highly effective management development program (Leadership Edge), a robust pipeline of leaders across the organization and a diversity strategy that attracts, motivates, and retains some of the best possible talent. |
1 | TBVPS and ROTCE are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. On a comparable U.S. GAAP basis, for 2008 through 2016 respectively, return on equity (“ROE”) was 4%, 6%, 10%, 11%, 11%, 9%, 10%, 11%, and 10%, and book value per share (“BVPS”) was $36.15, $39.88, $42.98, $46.52, $51.19, $53.17, $56.98, $60.46, and $64.06. |
2 | Despite record net income and 15% ROTCE, the Board exercised discretion relating to risk and control and reduced Mr. Dimon’s pay in 2012. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 5 |
6 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
ü | RECOMMENDATION: Vote FOR all nominees |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 7 |
EXECUTIVE SUMMARY |
DIRECTOR NOMINATION PROCESS |
8 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 9 |
DIRECTOR CRITERIA |
Executive experience | ||||
Finance and accounting – knowledge of accounting and financial reporting and of auditing processes and standards | ||||
Financial services – experience in or with the financial services industry, including investment banking and global financial markets | ||||
International business operations – operational experience in diverse geographic, political and regulatory environments | ||||
Leadership of a large, complex organization – senior executive experience managing business operations, development and strategic planning | ||||
Management development and succession planning – experience in senior executive development, succession planning, and compensation matters | ||||
Public company governance – knowledge of public company governance issues, policies and best practices | ||||
Technology – experience with or oversight of innovative technology, cybersecurity, information systems/data management, fintech or privacy, and their related risks | ||||
Regulated industries and regulatory issues – experience with regulated businesses, regulatory requirements, and relationships with regulators | ||||
Risk management and controls – experience in assessment and management of business and financial risk factors |
Personal attributes |
Integrity |
Judgment |
Strong work ethic |
Strength of conviction |
Collaborative approach to engagement and oversight |
Inquisitive and objective perspective |
NOMINEES’ QUALIFICATIONS AND EXPERIENCE |
10 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 11 |
![]() | Director since 2013 Directors’ Risk Policy Committee (Chair) Retired Deputy Head of Risk Management of JPMorgan Chase & Co. |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Experience with regulatory issues | ||
• | Extensive background in risk management | ||
• | Financial services experience |
![]() | Director since 2011 Audit Committee (Chair) Retired Executive Vice President of The Boeing Company |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Finance and accounting experience | ||
• | Leadership of a complex, multi-disciplinary global organization | ||
• | Technology, regulatory issues and regulated industry experience |
12 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
![]() | Director since 2006 Audit Committee Public Responsibility Committee (Chair) Chairman Emeritus of The Springs Company |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | International business operations experience | ||
• | Management development, compensation and succession planning experience | ||
• | Risk management and audit experience |
![]() | Director since 2004 and Director of Bank One Corporation from 2003 to 2004 Compensation & Management Development Committee Corporate Governance & Nominating Committee Chief Executive Officer of NBCUniversal, LLC |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Experience leading large, international, complex businesses in regulated industries | ||
• | Financial controls and reporting experience | ||
• | Management development, compensation and succession planning experience |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 13 |
![]() | Director since September 2016 Directors’ Risk Policy Committee Public Responsibility Committee Investment Officer at Berkshire Hathaway, Inc. |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Extensive financial markets experience | ||
• | Risk assessment experience | ||
• | Experience with regulatory issues |
![]() | Director since 2004 and Director of Bank One Corporation from 1991 to 2004 Directors’ Risk Policy Committee President of Henry Crown and Company |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Extensive risk management experience | ||
• | Management development, compensation and succession planning experience | ||
• | Significant financial markets experience |
14 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
![]() | Director since 2004 and Chairman of the Board of Bank One Corporation from 2000 to 2004 Chairman and Chief Executive Officer of JPMorgan Chase & Co. |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Experience leading a global business in a regulated industry | ||
• | Extensive experience leading complex international financial services businesses | ||
• | Management development, compensation and succession planning experience |
![]() | Director since 2012 Audit Committee Public Responsibility Committee Retired Chairman and Chief Executive Officer of KPMG |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Experience in financial services, accounting, auditing and controls | ||
• | Leadership of a complex, global business | ||
• | Technology, risk management and regulatory experience |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 15 |
![]() | Director since 2004 and Director of Bank One Corporation from 1993 to 2004 Audit Committee Chairman and Chief Executive Officer of Clear Creek Properties, Inc. |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Experience in financial controls and reporting and risk management | ||
• | Extensive regulatory background | ||
• | Management development, compensation and succession planning experience |
![]() | Director since 2014 Directors’ Risk Policy Committee Retired Vice Chairman of General Electric Company and Retired Chairman and Chief Executive Officer of GE Capital |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Extensive background in financial services | ||
• | Leadership of large, complex, international businesses in a regulated industry | ||
• | Technology, risk management and operations experience |
16 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
![]() | Director since 2001 and Director of J.P. Morgan & Co. Incorporated from 1987 to 2000 Compensation & Management Development Committee (Chair) Corporate Governance & Nominating Committee Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Extensive background in public company governance and international business | ||
• | Leadership in regulated industries and regulatory issues | ||
• | Management development, compensation and succession planning experience |
![]() | Director since 2005 Compensation & Management Development Committee Corporate Governance & Nominating Committee (Chair) Retired Chairman and Chief Executive Officer of Johnson & Johnson |
DIRECTOR QUALIFICATION HIGHLIGHTS | |||
• | Extensive background in public company governance and international business | ||
• | Leadership of a complex, global organization in a regulated industry | ||
• | Management development, compensation and succession planning experience |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 17 |
PRINCIPLES |
BOARD STRUCTURE AND RESPONSIBILITIES |
• | The respective responsibilities for the positions of Chairman, Lead Independent Director and CEO |
• | The policies and practices in place to provide independent Board oversight of management (including Board oversight of CEO performance and compensation; regularly held executive sessions of the independent directors; Board input into agendas and meeting materials; and Board self-assessment) |
• | The people currently in the roles of Chairman, Lead Independent Director and CEO |
• | The Firm’s circumstances including performance |
• | The potential impact of particular leadership structures on the Firm’s performance |
• | The Firm’s ability to attract and retain qualified individuals for Firm and Board leadership positions |
• | The views of our shareholders |
• | Legislative and regulatory developments regarding board leadership structures |
• | Trends in corporate governance, including practices at other public companies, and academic studies on board leadership structures and the impact of leadership structures on shareholder value |
• | Such other factors as the Board may determine |
18 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | Independent oversight — All of our directors are independent, with the exception of our Chairman and CEO, James Dimon. The independent directors meet in executive session with no management present at each regularly scheduled in-person Board meeting, where they discuss any matter they deem appropriate. |
• | Chairman of the Board — Our Chairman is appointed annually by all the directors. The Chairman’s responsibilities include: |
— | calling Board and shareholder meetings |
— | presiding at Board and shareholder meetings |
— | preparing meeting schedules, agendas and materials, subject to the approval of the Lead Independent Director |
• | Lead Independent Director — The Lead Independent Director is appointed annually by the independent directors. The role includes the authority and responsibility to: |
— | call a Board meeting (as well as a meeting of the independent directors of the Board) at any time |
— | preside over Board meetings when the Chairman is absent or his participation raises a possible conflict |
— | approve Board meeting agendas and add agenda items |
— | preside over executive sessions of independent directors, which take place at every regularly scheduled in-person Board meeting |
— | meet one-on-one with the CEO at every regularly scheduled in-person Board meeting |
— | guide the annual performance evaluation of the Chairman and CEO |
— | guide independent director consideration of CEO compensation |
— | guide full Board consideration of CEO succession issues |
— | guide the annual self-assessment of the full Board |
— | facilitate communication between management and the independent directors |
— | be available for consultation and communication with shareholders and other constituencies where appropriate |
• | Committee chairs — The Board’s committee structure is designed for effective and efficient board operations. All committee chairs are independent and are appointed annually by the Board. See page 20 of this proxy statement for further information about our committees. Committee chairs are responsible for: |
— | calling meetings of their committees |
— | presiding at meetings of their committees |
— | approving agendas, adding agenda items, and reviewing materials for their committee meetings |
— | serving as a liaison between committee members and the Board, and between committee members and senior management, including the CEO |
— | working directly with the senior management responsible for committee matters |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 19 |
COMMITTEES OF THE BOARD |
![]() | Audit Committee James A. Bell, Chair |
• | The independent registered public accounting firm’s qualifications and independence |
• | The performance of the internal audit function and the independent registered public accounting firm |
• | Management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to (i) safeguard the assets and income of the Firm; (ii) assure the integrity of the Firm’s financial statements; and (iii) maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations |
![]() | Compensation & Management Development Committee Lee R. Raymond, Chair |
• | Development of and succession planning for key executives |
• | Compensation principles and practices, including: |
— | Review and approval of the Firm’s compensation and benefit programs |
— | The competitiveness of these programs |
— | The review of the relationship among risk, risk management, and compensation in light of the Firm’s objectives, including its safety and soundness and the avoidance of practices that would encourage excessive or unnecessary risk-taking |
• | The Firm’s culture and conduct programs |
20 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
![]() | Corporate Governance & Nominating Committee William C. Weldon, Chair |
• | The review and recommendation of proposed nominees for election to the Board |
• | The evaluation and recommendation to the Board of corporate governance practices applicable to the Firm |
• | The appraisal of the framework for assessing the Board’s performance and the Board’s self-evaluation |
![]() | Public Responsibility Committee Crandall C. Bowles, Chair |
• | Community investment |
• | Fair lending |
• | Sustainability |
• | Consumer practices |
![]() | Directors’ Risk Policy Committee Linda B. Bammann, Chair |
• | The Firm’s credit risk, market risk, structural interest rate risk, principal risk, liquidity risk, country risk and model risk |
• | The governance frameworks or policies for operational risk, compliance risk including fiduciary risk, and reputational risk |
• | Capital and liquidity planning and analysis and approve the Firm’s Risk Appetite Policy and other policies it designates as Primary Risk Policies |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 21 |
• | BSA/AML (Bank Secrecy Act/Anti-Money Laundering) Compliance Committee |
• | FX (Foreign Exchange)/Markets Orders Compliance Committee |
• | Sworn Documents Compliance Committee |
• | Trading Compliance Committee |
22 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
BOARD COMMITTEE MEMBERSHIP AND 2016 BOARD MEETINGS |
Current Board committee membership | ||||||||||||
Director | Audit | Compensation & Management Development | Corporate Governance & Nominating | Public Responsibility | Directors’ Risk Policy | Specific Purpose Committees 1 | ||||||
Linda B. Bammann 2 | Chair | C,E | ||||||||||
James A. Bell 2 | Chair | A | ||||||||||
Crandall C. Bowles | Member | Chair | A | |||||||||
Stephen B. Burke | Member | Member | ||||||||||
Todd A. Combs 2 | Member | Member | ||||||||||
James S. Crown | Member | |||||||||||
James Dimon | ||||||||||||
Timothy P. Flynn 2 | Member | Member | C | |||||||||
Laban P. Jackson, Jr. | Member | A,B,D,E | ||||||||||
Michael A. Neal | Member | E | ||||||||||
Lee R. Raymond 3 | Chair | Member | B,D,E | |||||||||
William C. Weldon | Member | Chair | B,C,D |
1 | The Board’s separately established Specific Purpose Committees in 2016 were: |
2 | In March 2017, Ms. Bammann became Chair of the Directors’ Risk Policy Committee and stepped down from the Public Responsibility Committee; Mr. Bell became Chair of the Audit Committee; Mr. Combs joined the Directors’ Risk Policy Committee and Public Responsibility Committee; and Mr. Flynn joined the Audit Committee and stepped down from the Directors’ Risk Policy Committee. |
3 | Lead Independent Director |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 23 |
BOARD’S ROLE IN RISK MANAGEMENT OVERSIGHT |
24 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
BOARD ASSESSMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 25 |
BOARD ENGAGEMENT |
• | Hosted more than 90 shareholder outreach discussions, covering shareholders representing in the aggregate over 40% of our outstanding common stock – similar to our 2015 outreach program. Topics included: |
— | company strategy and performance |
— | management and Board compensation |
— | Board structure and composition |
— | Corporate Governance Principles and By-Laws, including proxy access |
— | succession planning |
— | environmental and social issues |
— | disclosures – proxy format and content |
• | Members of senior management participated in more than 60 investor meetings and presented at 12 investor conferences. Members of senior management also made trips to major cities throughout the U.S., as well as international trips to Asia and Europe, during which they met in person with shareholders and other interested parties. |
• | Members of senior management presented at the annual Investor Day on the Firm’s strategy and financial performance and our CEO and Lead Independent Director presented to shareholders at the Firm’s annual meeting. |
26 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | Proxy access, which enables eligible shareholders to include their nominees for election as directors in the Firm’s proxy statement. Proxy access is described in more detail on page 101 of this proxy statement. |
• | The ability to call a special meeting by shareholders holding at least 20% of the outstanding shares of our common stock (net of hedges). |
• | The ability of shareholders holding at least 20% of the outstanding shares of our common stock (net of hedges) to act by written consent on terms substantially similar to the terms applicable to call special meetings. |
DIRECTOR INDEPENDENCE |
• | The Corporate Governance Principles adopted by the Board and published on our website at jpmorganchase.com/corp-gov-principles, under the heading Governance, which is under the About Us tab |
• | The NYSE corporate governance listing standards |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 27 |
• | Consumer credit: extensions of credit provided to directors Bowles and Jackson; and credit cards issued to directors Bammann, Bell, Bowles, Crown, Flynn, Jackson, Neal, Raymond, and Weldon, and their immediate family members |
• | Wholesale credit: extensions of credit and other financial and financial advisory services provided to NBCUniversal, LLC and Comcast Corporation, for which Mr. Burke is the Chief Executive Officer and a senior executive, respectively, and their subsidiaries; Berkshire Hathaway, Inc., for which Mr. Combs is an Investment Officer, and its subsidiaries; Henry Crown and Company, for which Mr. Crown is the President, and other Crown family-owned entities; and a company that has among its principal shareholders, funds managed by The Energy & Minerals Group, for which a son of Mr. Raymond is the Chief Executive Officer |
• | Goods and services: commercial office space leased by the Firm from subsidiaries of companies in which Mr. Crown and members of his immediate family have indirect ownership interests; national media placements with NBCUniversal and Comcast outlets; and purchases from Berkshire Hathaway subsidiaries of merchandising fixtures, private aviation services, press release distributions, and professional services related to the Firm’s corporate-owned aircraft |
DIRECTOR COMPENSATION |
28 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
Compensation | Amount ($) | ||
Board retainer | $ | 75,000 | |
Lead Independent Director retainer | 30,000 | ||
Audit and Risk Committee chair retainer | 25,000 | ||
Audit and Risk Committee member retainer | 15,000 | ||
All other committees chair retainer | 15,000 | ||
Deferred stock unit grant | 225,000 | ||
Bank board retainer | 15,000 | ||
Bank board chair retainer | 25,000 |
Director | Fees earned or paid in cash ($)1 | 2016 Stock award ($)2 | Other fees earned or paid in cash ($)3 | Total ($) | |||||||||||||
Linda B. Bammann | $ | 90,000 | $ | 225,000 | $ | 34,375 | $ | 349,375 | |||||||||
James A. Bell | 90,000 | 225,000 | 39,375 | 354,375 | |||||||||||||
Crandall C. Bowles | 105,000 | 225,000 | 39,375 | 369,375 | |||||||||||||
Stephen B. Burke | 75,000 | 225,000 | 9,375 | 309,375 | |||||||||||||
Todd A. Combs 4 | 21,250 | — | 4,250 | 25,500 | |||||||||||||
James S. Crown | 115,000 | 225,000 | 15,000 | 355,000 | |||||||||||||
Timothy P. Flynn | 90,000 | 225,000 | 34,375 | 349,375 | |||||||||||||
Laban P. Jackson, Jr. | 115,000 | 225,000 | 192,500 | 532,500 | |||||||||||||
Michael A. Neal | 90,000 | 225,000 | 9,375 | 324,375 | |||||||||||||
Lee R. Raymond | 120,000 | 225,000 | 46,875 | 391,875 | |||||||||||||
William C. Weldon | 90,000 | 225,000 | 102,500 | 417,500 |
1 | Includes fees earned, whether paid in cash or deferred, for service on the Board of JPMorgan Chase. For additional information on each Director’s service on the Board and committees of JPMorgan Chase, see “Committees of the board” at page 20 of this proxy statement. |
2 | On January 19, 2016, each director received an annual stock award in an amount of deferred stock units equal to $225,000, based on a grant date fair market value of $57.24. The aggregate number of option awards and stock awards outstanding at December 31, 2016, for each current director is included in the “Security ownership of directors and executive officers” table on page 71 of this proxy statement under the columns “Options/SARs/Warrants exercisable within 60 days” and “Additional underlying stock units,” respectively. All such awards are vested. |
3 | Includes fees paid to the non-management directors for their service on the Board of Directors of the Bank or who are members of one or more Specific Purpose Committees. Fees were prorated for those directors who joined the Bank Board during 2016. A fee of $2,500 is paid for each Specific Purpose Committee meeting attended (with the exception of the Omnibus Committee). Also includes for Mr. Jackson, $110,000 in compensation during 2016 in consideration of his service as a director of J.P. Morgan Securities plc, one of the Firm’s principal operating subsidiaries in the United Kingdom and a subsidiary of the Bank. |
4 | Mr. Combs joined the JPMorgan Chase Board in September 2016; his retainer for Board service in 2016 was prorated. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 29 |
30 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
BUSINESS PRINCIPLES |
CODE OF CONDUCT |
CODE OF ETHICS FOR FINANCE PROFESSIONALS |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 31 |
SUPPLIER CODE OF CONDUCT |
32 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
ü | RECOMMENDATION: Vote FOR approval of this advisory resolution to approve executive compensation |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 33 |
EXECUTIVE SUMMARY |
ADVISORY RESOLUTION |
ü | The Board of Directors recommends a vote FOR this advisory resolution to approve executive compensation. |
34 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
1 | Return on tangible common equity ("ROTCE") is a non-GAAP financial measure. For a reconciliation and explanation of this non-GAAP measure, see page 102. |
2 | Includes dividends and net share repurchases |
3 | See page 59 for more details on clawbacks |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 35 |
1. How did we perform? | ||||
We continued to deliver strong multi-year financial performance while enhancing our customers' experience, strengthening the efficiency and effectiveness of our control environment, reinforcing our corporate culture, and continuing to make long-term investments in our people. |
I. BUSINESS RESULTS |
Consumer & Community Banking | Corporate & Investment Bank | |||
Revenue $44.9B | • Average deposits of $587B, up 10%, more than twice the industry average, with nearly half the growth from existing customers • Strong core loan growth of 20%3 • Achieved $2.4B structural expense reduction4 as part of multi-year initiative while continuing to prudently invest • #1 U.S. credit card issuer with 21.5% market share on sales volume5 • Record merchant processing volume of ~$1T • Largest active mobile customer base among major U.S. banks of 26.5M, up 16% | Revenue $35.2B | • Maintained #1 ranking in Global Investment Banking (“IB”) fees with 8.1% wallet share and ranked #1 in both NA and EMEA (per Dealogic) • Maintained #1 position in Fixed Income (12% share)6 • Improved rankings and grew share in Equities & Prime (#2)6 • Progressed steadily on expense target with reported expense of $19B, down 11% • Top 3 Custodian globally with assets under custody ("AUC") of $20.5T | |
Net Income $9.7B | Net Income $10.8B | |||
ROE 18% | ROE 16% | |||
Commercial Banking | Asset & Wealth Management | |||
Revenue $7.5B | • Record gross investment banking revenue of $2.3B, up 5% • Record average loans of $179B, up 14% • Ranked #1 multifamily lender in U.S. • #1 in perceived customer satisfaction (CFO Magazine) • Industry-leading credit performance — 5th straight year of net recoveries or single digit net charge-off rate | Revenue $12.0B | • Assets under management (“AUM”) of $1.8T, including $23B of net long-term inflows • Record average loans of $113B, up 5% • Strong 5-year long-term investment performance with 79% of mutual fund AUM ranked in the 1st or 2nd quartile • Named #1 North America and Latin America Private Bank by Euromoney | |
Net Income $2.7B | Net Income $2.3B | |||
ROE 16% | ROE 24% | |||
B = billions T = trillions |
1 | All comparative percentages provided in this table reflect changes from 2015 to 2016 |
2 | ROTCE and TBVPS are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. |
3 | The CET1 capital ratio under the Basel III Fully Phased-In capital rules is considered a key regulatory capital measure; and core loans are also considered a key performance measure. For more information, see Notes on key performance measures on page 102. |
4 | Reduction from year-end 2014 through exit 2016 (4Q16 annualized); structural expense excludes non-core items, incremental investments and business growth |
5 | Ranking based on 4Q16 sales volume and loans outstanding disclosures by peers (C, BAC, COF, AXP, DFS) and internal JPMorgan Chase estimates; market share based on general purpose credit card spend, which excludes private label and Commercial Card |
6 | Market share and rank is based on Coalition FY16 results and reflects JPMorgan Chase’s share of Coalition's Global Industry Revenue Pool. Total industry pool is based on JPMorgan Chase's internal business structure. |
36 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
STRONG ROTCE ON INCREASING CAPITAL |
SUSTAINED GROWTH IN BOTH TBVPS AND EPS |
1 | Growth rates are based on an 8-year compound annual growth rate. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 37 |
SUSTAINED SHAREHOLDER VALUE (“TSR”) |
1 | Total shareholder return assumes reinvestment of dividends |
II. STRENGTHENED OUR CONTROL ENVIRONMENT AND REINFORCED OUR CULTURE |
38 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
III. ENHANCING THE CUSTOMER AND CLIENT EXPERIENCE |
• | Consumer & Community Banking (“CCB”) — We enhanced our customers’ digital experience by improving Chase Pay, while also developing partnerships with Apple and Samsung and signing on key merchants. New functionality was added to Chase QuickPaySM through the development and launching of a peer-to-peer ("P2P") solution with real-time funds availability. We also launched the Freedom Unlimited Card, Chase Sapphire Reserve Card, and Chase Business Quick Capital program for our Business Banking customers, providing a new online lending product with real-time approvals. |
• | Corporate & Investment Bank (“CIB”) — We made significant investments in technology to simplify and improve the customer experience and streamline operations. We developed an in-house Blockchain Center of Excellence and have actively driven the development of Blockchain technology via industry consortia. In payments, we have made progress on our multi-year strategy by expanding FX ACH from 12 to 17 currencies. Specifically for our Markets business, we are creating an end-to-end digital experience for clients to simplify their engagement with us and enable them to embrace market change. We also continued to roll out corporate QuickPaySM, a mobile and web-based solution that provides our corporate clients with additional flexibility to pay their customers. |
• | Commercial Banking (“CB”) — We continued to increase our digital capabilities with the launch of a new online platform, an improved client document exchange, and enhanced online loan capabilities. In addition, we centralized client data management to drive enhanced quality and business insights and created a program to help bankers connect clients with relevant firm thought leadership. |
• | Asset & Wealth Management (“AWM”) — Our wealth management businesses in Chase Wealth Management and J.P. Morgan Wealth Management were brought together in order to better serve our clients across the entire wealth spectrum. We continued to invest in technology and digital wealth management initiatives to enhance our customer service and create a fully integrated and seamless digital experience for clients. In Asset Management, we launched the Let’s Solve ItSM brand campaign, sharing our expertise with clients to empower them to make better investment decisions. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 39 |
IV. INVESTMENT IN OUR PEOPLE |
40 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | World’s Most Admired Companies by Fortune magazine; |
• | America’s Ideal Employers by Universum; |
• | Best for Vets by Military Times; |
• | Best Employer for Healthy Lifestyles by the National Business Group on Health; |
• | Best Companies for Multicultural Women by Working Mother Magazine; and |
• | 100% rating on the Corporate Equality Index (15 consecutive years) and a 100% rating on the Disability Equality Index |
• | Increase the representation of black employees at the officer level; |
• | Increase the pipeline of junior talent; and |
• | Retain existing talent with development opportunities for continued advancement |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 41 |
2. How do we assess performance and determine pay? | ||||
The CMDC uses a balanced approach to determine annual total compensation by assessing performance against four broad categories over a sustained period of time. A portion of the total compensation is delivered in the form of Performance Share Units which reinforces accountability by linking ultimate payout to pre-established absolute and relative goals. |
PAY-FOR-PERFORMANCE FRAMEWORK |
PERFORMANCE ASSESSMENT FACTORS |
I. | Business results |
II. | Risk and control |
III. | Customers and clients |
IV. | People and leadership |
PERFORMANCE ASSESSMENT PROCESS |
• | The Board reviews Firm and LOB strategy and business plans |
• | The CEO and other Operating Committee members establish individual performance priorities, which are reviewed with the Board |
• | Throughout the year, the Board and CMDC review Firm, LOB, function, and individual performance, as appropriate |
• | All LOBs and regions review meaningful risk and control issues related to the LOB or function on a quarterly basis, as well as firmwide issues that may have potential group or individual accountability. For HR Control Forum issues that may impact an OC member, the issues will be raised by the General Counsel and Head of Human Resources to the CEO to be considered in the Operating Committee member's performance reviews. The CEO (with the General Counsel and Head of Human Resources as appropriate) will submit final recommendations for compensation or other impact to the CMDC for approval |
• | Feedback from the Firm’s risk & control professionals |
42 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
EVALUATING MARKET PRACTICES |
ü | Financial services industry | ü | Industry leader | ||
ü | Significant global presence | ü | Comparable size | ||
ü | Global iconic brand | ü | Recruits top talent |
Financial Services Peers | General Industry Peers | ||||
American Express | 3M | CVS | Oracle | Verizon | |
Bank of America | AT&T | Exxon Mobil | Pepsico | Wal-Mart | |
Citigroup | Boeing | General Electric | Pfizer | Walt Disney | |
Goldman Sachs | Chevron | IBM | Procter & Gamble | ||
Morgan Stanley | Coca Cola | Johnson & Johnson | Time Warner | ||
Wells Fargo | Comcast | Merck | United Technologies |
1 | Source: Annual reports; revenue reflects reported basis |
2 | Market capitalization is based on stock price multiplied by shares outstanding as of fiscal year-end 2016 |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 43 |
DETERMINING PAY LEVELS |
• | Performance, based on four broad categories (see pages 47–53) |
• | Value of the position to the organization and shareholders over time (i.e., “value of seat”) |
• | Setting an example for others by acting with integrity and strengthening our culture |
• | External talent market (i.e., market data) |
• | Internal equity among Operating Committee members, as appropriate |
DETERMINING PAY MIX |
FORMULA USED IN DETERMINING NUMBER OF PSUs EARNED AT VESTING |
44 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
3. How did we pay our CEO and other NEOs? | ||||
CEO pay is strongly aligned to the Firm’s short-, medium- and long-term performance, with approximately 80% of his variable pay deferred into equity, of which 100% is in at-risk PSUs. Pay for other NEOs is also closely tied to Firm and LOB sustained performance, with a majority of their variable pay deferred into equity, of which 50% is in PSUs. |
PAY ELEMENTS |
Elements1 | % of Variable | Purpose | Description | Vesting | Subject to Clawback2 | ||
CEO | NEOs | ||||||
Fixed | |||||||
Salary | N/A | N/A | • Fixed portion of total pay that enables us to attract and retain talent | • Only fixed source of cash compensation • Base salary of OC members has remained flat since 2011 | • N/A | ||
Variable | |||||||
Cash Bonus | ~20% | 40% | • Provides a competitive annual cash incentive opportunity | • Payout determined and rewarded after end of performance year • Represents less than half of OC members’ variable compensation | • Immediately vested, subject to bonus recoupment provision | ü | |
RSUs | 0% | 30% | • RSUs serve as a strong retention tool • PSUs reinforce accountability by linking objective targets to a formulaically determined payout • PSUs and RSUs provide a competitive mix of time-based and performance-based equity awards • Both PSUs and RSUs are aligned with long-term shareholder interests as payout value fluctuates up or down based on stock price performance | • Both RSUs and PSUs are subject to protection-based vesting • Both RSUs and PSUs are subject to the retention/ownership policy applicable to all OC members • RSUs and PSUs do not carry voting rights • Dividend equivalents are paid on the RSUs at the time actual dividends are paid on JPMorgan Chase common stock | • Generally vest over three years — 50% after two years, with the remaining 50% after three years | ü | |
PSUs | ~80% | 30% | • Payout based on absolute ROTCE and relative ROTCE • Performance goals remain the same for entire award term • Payout levels range from 0–150% • PSUs are settled in shares of common stock • Dividends accrue and are paid out in shares of common stock at vesting based on units earned • See page 46 for additional details on program | • 3-year performance period • Award cliff vests after the end of the 3-year performance period, with shares subject to an additional 2-year hold (for a combined period of approximately 5 years) | ü |
1 | Due to local regulations, Mr. Pinto receives a fixed allowance, did not receive a cash bonus, and both his RSUs and PSUs are subject to (a) extended seven year vesting (commencing ratably on the third year anniversary of grant); (b) additional U.K. clawback/recovery provisions; and (c) a minimum six-month hold after each vesting. In addition, as it relates to Mr. Pinto’s PSUs, the CMDC may use its discretion, if appropriate, to downward adjust payout (to 0%) based on his performance against qualitative criteria and priorities during the performance period. U.K. regulators review compensation structures for Identified Staff annually and may request future adjustments. |
2 | Additional information on recovery and clawback provisions is provided on page 59 of this proxy statement. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 45 |
PERFORMANCE SHARE UNIT PROGRAM |
Plan Feature | Performance Year 2016 PSU Award Description |
Vehicle | • Value of units moves with stock price during performance period; units are settled in shares at vesting |
Time Horizon | • 3-year cliff vesting, plus an additional 2-year holding period (for a combined 5-year holding period) |
Performance Measures | • After evaluation, the CMDC selected ROTCE1, as it is a fundamental measure of financial performance that reflects the Firm’s profitability as well as use of its equity, thereby incorporating both the income statement and the balance sheet. It measures how well management is using common shareholders’ equity to generate profit. It is a primary measure by which we manage our business, and is used by the Firm as well as investors and analysts to assess our performance and that of our competitors. |
Payout Grid | • Payout under the PSU plan will be calculated annually based on absolute and relative ROTCE per the formulaic payout grid below. Absolute and relative performance metrics help promote a fair outcome for both shareholders and participants. In January 2017, the CMDC set maximum payout at an ROTCE level of 14% (or greater). |
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Determining Absolute and Relative Performance Goals | • In setting the 14% absolute ROTCE goal, the CMDC reviewed the Firm’s historical performance and a reasonable range of net income and capital outcomes over the next three years. These outcomes were considered in the context of (among other things) regulatory capital requirements, annual stress tests, interest rates and the economic environment, all of which affect the range of ROTCE outcomes in the medium term. • Specifically, the CMDC recognized that the Firm earned record net income in each of the last three years, which resulted in ROTCE of 13% in each year. As tangible common equity in the denominator compounds with retained earnings, continually higher net income in the numerator is needed each year to maintain 13% ROTCE, and even higher record net income would be required to increase ROTCE to 14%. For illustrative purposes, in 2016, the Firm would have needed to generate over $2 billion of additional net income in order to achieve 14% ROTCE. • Consistent with our pay-for-performance philosophy, in setting the relative ROTCE performance goals, the CMDC determined that payout above target for previously granted PSU awards should be limited to instances in which we outperform our peers, with below target payout occurring in instances of under-performance. Achievement of median performance results in target payout (100%) consistent with peer practices, and what the CMDC believes is a fair and balanced outcome. Payout of 150% is limited to outstanding relative performance, which the CDMC determined to be in the top 25% of peers (or top 3). |
PSU Performance Companies | • Criteria: close competitors with business activities that overlap with at least 30% of our revenue mix • Bank of America, Barclays, Capital One Financial, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, UBS, and Wells Fargo |
Narrow Adjustment Provision | • The CMDC may only make adjustments (up or down) to maintain the intended economics of the award in light of changed circumstances (e.g., change in accounting rules/policies or changes in capital structure). Mr. Pinto is also subject to additional downward adjustments (see footnote 1 on page 45). |
2015 Award (Prior Year) | • In 2016, we generated 13% ROTCE on an absolute basis and achieved 1st Quartile performance on a relative basis, which results in an expected future payout of 150% for 1/3rd of the units. |
1 | ROTCE is calculated for each year in the Performance Period using unadjusted reported data as set forth in public financial disclosures. |
46 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
MR. DIMON’S 2016 COMPENSATION IS ALIGNED WITH HIS MULTI-YEAR PERFORMANCE |
• | Strong annual ROTCE1 on increasing levels of capital (13% or higher ROTCE1 in 6 of the last 7 years); |
• | Record Net Income (6 of the last 7 years); |
• | Record EPS (5 of the last 7 years); |
• | Strong TBVPS1 growth rate of 10% (compounded annually over the last 7 years); and |
• | Returned $61 billion to shareholders (over the last 7 years) |
1 | ROTCE and TBVPS are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. |
2 | Total compensation is comprised of base salary, cash bonus paid, and long-term incentive compensation (target value) in connection with the performance year, which may be different from amounts reported in Summary Compensation Table. The most recently used compensation data is 2015 since not all of our Financial Services peers will have filed proxy statements (with 2016 compensation data) before the preparation of our own proxy statement. Source: Proxy statements. |
3 | Percentage of profits paid is equal to three-year average CEO compensation divided by three-year average net income. Source: 2014-2016 Proxy statements. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 47 |
1 | ROTCE and TBVPS are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. |
2 | Despite record net income and 15% ROTCE, the Board exercised discretion relating to risk and control and reduced Mr. Dimon's pay in 2012. |
48 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
MR. DIMON’S PAY-FOR-PERFORMANCE |
2016 Priorities and Performance • Mr. Dimon's strategic priorities were to continue to invest in innovation to better serve our clients, continue down the path of having fortress controls, reinforce a strong sense of personal accountability and a sound culture, position the Firm as the leader of wholesale and retail payments, capture the full potential of our data assets, and attract and develop the best diverse talent. • For 2016, the Firm achieved strong ROTCE with record net income and record EPS. We returned $15.0 billion to share-holders in the form of dividends and net share repurchases. • Mr. Dimon continued to invest significant resources to provide the necessary infrastructure for our control agenda and has continued to develop our outstanding management team and to enhance our diversity programs, with the Firm being recognized as a top employer for women, blacks, hispanics, LGBT and veterans. • Mr. Dimon was awarded total compensation of $28.0 million, up from $27.0 million in 2015. |
SUMMARY OF 2016 KEY ACHIEVEMENTS |
Business Results | Risk and Control | |
• Strong ROTCE1 of 13%, record net income of $24.7 billion and record EPS of $6.19, and TBVPS1 growth of 7%, reflecting a continued focus on efficiency and hitting our expense and capital targets • Maintained a fortress balance sheet, increasing our Basel III Advanced Fully Phased-In CET1 capital ratio by 60 bps to 12.2% • $2.4 trillion of credit and capital raised in 2016 illustrating the strength and depth of our businesses | • Continued to strengthen the global Culture and Conduct program by developing a formalized firmwide conduct risk framework and further embedded our business principles throughout the employee lifecycle • Continued to improve the efficiency and effectiveness of the Firm’s risk and control agenda, including the management of conduct risk, and numerous initiatives to address regulatory commitments | |
Customers and Clients | People and Leadership | |
• Maintained or improved first-class franchises: — CCB had ~26.5 million active mobile customers by the end of 2016, up 16% year-over-year — CIB participated in seven of the top ten fee-generating IB transactions in 2016 (per Dealogic) — CB ranked #1 multifamily lender in the US — AWM named #1 Private Bank in the World by Global Finance Magazine • Continued to support our communities, including a $20 million pledge to revitalize neighborhoods in five cities | • Launched the Advancing Black Leaders initiative with the objective of better attracting external black talent, while retaining and developing our internal talent • Continued investment in programs and initiatives that support the advancement of women, and which reinforce our employer of choice reputation in the marketplace • Worked closely with the CMDC and the Board on Operating Committee members’ development and succession planning |
1 | ROTCE and TBVPS are each non-GAAP financial measures. For a reconciliation and explanation of these non-GAAP measures, see page 102. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 49 |
MS. LAKE’S PAY-FOR-PERFORMANCE |
2016 Priorities and Performance • Ms. Lake’s priorities were to continue to progress the strategic vision of our Global Finance & Business Management organization; optimize our performance with a focus on maximizing risk adjusted return on capital while complying with all regulatory constraints; enhance our risk and control environment; continue to actively engage with our diverse shareholder base; strengthen our relationship with regulators; and lead certain people initiatives, including further solidifying Global Finance’s succession bench and executing targeted mobility moves for senior talent. • In determining Ms. Lake’s compensation, the CMDC considered her consistently strong performance relative to the pay and performance of other high caliber CFOs and her key accomplishments highlighted below. • Ms. Lake was awarded total compensation of $12.5 million, up from $11.0 million in 2015. | |
SUMMARY OF 2016 KEY ACHIEVEMENTS |
Business Results | Risk and Control | |
• Established a multi-metric based equity capital allocation framework which is dynamic and aligns incentives with the Firm’s multiple binding constraints • Rolled out new firmwide platform for regulatory capital to drive greater organizational efficiency • Led successful submission of the Comprehensive Capital Analysis and Review (“CCAR”) • Enhanced the Global Finance & Business Management organization, including introduction of 14 firmwide reporting controller roles aligned to specific financial instruments and disclosures | • Led successful 2016 Resolution Submission — adequately remediated identified deficiencies in the 2015 Resolution Plan • Developed financial reporting application that will materially improve reporting and analytics in support of regulatory reports • Expanded Central Challenger mandate into Recovery and Resolution and Capital Management Policy Review • Developed firmwide CCAR CFO attestation program • Established monthly Global Tax Control and Oversight forum to address tax related risks and issues across the businesses and operations | |
Customers and Clients | People and Leadership | |
• Developed more robust stakeholder engagement around Environmental, Social and Governance (“ESG”) matters with shareholders, clients and other key stakeholders • Continued focus on shareholder outreach through multiple channels — including conferences, speaking engagements, group meetings and investor road shows • Continued focus on relationship with regulators through active engagement and regular dialogue | • Championed a number of firmwide diversity initiatives: — Sponsored six fellows in Firm’s ReEntry Program — Senior Sponsor of Women on the Move and Spelman College Alumni programs — Supported multiple recruiting networking events yielding hundreds of diverse pipeline candidates • Executed on multiple talent initiatives including creation of a global training forum and expansion of the Global Finance analyst program |
50 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
MS. ERDOES’ PAY-FOR-PERFORMANCE |
2016 Priorities and Performance • Ms. Erdoes’ priorities were to deliver strong financial results, including driving efficiencies, and to provide clients with superior investment performance, while continuing to invest in talent, innovate through technology, reinforce controls and maintain a strong culture to position AWM for continued success. • In 2016, Ms. Erdoes led the AWM business to deliver strong financial performance in a challenging market environment, while maintaining AWM’s market-leading position. Under her leadership, AWM continued its outstanding long-term investment performance through innovative solutions for clients, aligning with industry trends and maintaining its fiduciary culture. • Ms. Erdoes was awarded total compensation of $19.0 million, up from $18.0 million in 2015. |
SUMMARY OF 2016 KEY ACHIEVEMENTS |
Business Results | Risk and Control | |
Achieved strong results despite a challenging environment: • Net income of $2.3 billion on revenue of $12.0 billion with 24% ROE and 29% pretax margin• Long-term assets under management (“AUM”) of $1.3 trillion and client assets of $2.5 trillion• Net long-term AUM inflows of $23.0 billion and long-term inflows in client assets of $39.0 billion | Continued to invest significant resources towards and to focus on a strong controls infrastructure, including: • Prioritized all high risk clients’ Know Your Customer ("KYC") assessments in Wealth Management to enhance our compliance with BSA/USA PATRIOT Act• Cross Border Activities policy adopted a consistent global control framework• Supported the expansion of Independent Risk Management practices to address evolving business needs and regulatory expectations | |
Customers and Clients | People and Leadership | |
Continued to deliver excellent client experience through outstanding performance: • 79% of mutual fund AUM ranked in the 1st or 2nd quartile over five years• Broadened Wealth Management focus to capture opportunities across AWM's and CCB's entire U.S. wealth spectrum in a more seamless manner• Named #1 North America and Latin America Private Bank by Euromoney• Named Asset Management Company of the Year in Asia by The Asset for the 8th straight year | Executed on several key talent initiatives: • Effective retention, including 95% of senior top talent• Established ASCEND sponsorship program focusing on retaining and promoting top women and ethnically diverse talent• Enhanced our recruiting strategy by introducing new innovative technologies such as on demand digital interviewing for external hires, and launching a Mobility site to increase internal transfers and opportunity awareness |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 51 |
MR. PINTO’S PAY-FOR-PERFORMANCE |
2016 Priorities and Performance • Mr. Pinto’s priorities were to continue to deliver strong financial performance; maintain leadership positions across the full suite of CIB products, remain focused on business simplification and efficiency, and ensure that CIB remains on the forefront of technology innovation and emerging trends. • Mr. Pinto delivered strong results in a dynamic environment; maintained or improved CIB’s market-leading positions in most of the key business segments; exited businesses with non-core clients, made progress on the multi-year cost reduction targets and enhanced the CIB's control environment, including with respect to referral hiring. • Mr. Pinto was awarded total compensation of $19.0 million, up from $18.5 million in 2015. |
SUMMARY OF 2016 KEY ACHIEVEMENTS |
Business Results | Risk and Control | |
• Net Income of $10.8 billion on revenue of $35.2 billion with 16% return on equity (“ROE”) • Grew Global IB fee share, while the industry wallet declined • Total Markets and Fixed Income markets revenues of $21.0 billion (up 15%) and $15.3 billion (up 21%), respectively • Continued focus on cost reduction, with reported expense of $19.0 billion, down 11% year-over-year• Executed on multi-year transformation program to improve scalability and operating leverage | • Continued to drive the Culture and Conduct program for CIB and EMEA, incorporating lessons learned from both firmwide and industry events • Implemented strategic solution for Front Office Supervisors (“FOS”) to monitor conduct risk, including surveillance metrics and alerts • Created a payments control program to assess and mitigate operational payment risk on a prioritized basis • Made significant progress on improvement and stabilization of key technology platforms for Treasury Services and Custody & Fund Services | |
Customers and Clients | People and Leadership | |
• #1 in Global IB fees with 8.1% wallet share1 — #1 in IB fees in North America and EMEA1 • CIB participated in seven of the top ten fee-generating IB transactions in 20161 • #1 in Total Markets with 11.4% share2 — #1 in Fixed Income and improved Equities rank to #22 — #1 in Prime Brokerage by Institutional Investor | Continued focus on developing CIB’s existing talent, while positioning CIB as an employer of choice: • Supported numerous diversity initiatives, including 2nd annual ReEntry program and Adelante, a Business Resource Group empowering Hispanic and Latino employees • Rotated employees and created new or expanded roles to accelerate development of top talent • Continued focus on initiatives for Analysts and Associates to enhance work-life balance and retention |
1 | Per Dealogic |
2 | See footnote 6 on page 36 |
52 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
MR. ZAMES’ PAY-FOR-PERFORMANCE |
2016 Priorities and Performance • Mr. Zames’ 2016 priorities were to effectively manage a broad portfolio of firmwide functions and to deliver firmwide strategic initiatives; execute and drive enhancements in the Firm’s interest rate and liquidity risk frameworks; continue to drive the transformation of the technology organization and fortify our cybersecurity capabilities; leverage big data technologies to optimize use of data and drive cost efficiencies; enhance culture and conduct programs; firmwide resource and expense optimization; and remediation of key regulatory issues. • The CMDC recognized Mr. Zames’ significant progress (highlighted below) against these priorities, the breadth of his role in the Firm and his compensation relative to comparable executives and other NEOs. • Mr. Zames was awarded total compensation of $19.0 million, up from $18.5 million in 2015. | |
SUMMARY OF 2016 KEY ACHIEVEMENTS |
Business Results | Risk and Control | |
• Strengthened Firm’s balance sheet and liquidity position; drove significant body of work related to our 2016 Resolution submission • Developed debt optimization framework and introduced Total Loss Absorbing Capacity (“TLAC”) efficient callable debt structure to the market • Further progressed intraday liquidity program by leveraging technology and big data capabilities • Continued to drive significant and sustainable firmwide expense savings through programs like Organizational Effectiveness and noncompensation initiatives | • Fortified the Firm's defenses: cybersecurity, global resiliency, physical security, and control landscape • Established higher standards around managing market conduct risk; implemented an enhanced surveillance operating model • Successfully transitioned Compliance to Global Risk Management • Continued progress on a number of firmwide control programs including AML/BSA, cyber security and access administration | |
Customers and Clients | People and Leadership | |
• Continued to drive optimization of the Firm's technology organization through modernizing software delivery, rationalizing applications, infrastructure optimization efforts and workforce evolution • Advanced hybrid cloud strategy improving agility and scalability for developer community • Drove innovation across the firm by leveraging big data and analytic capabilities • Improved security of Firm’s data through enhanced loss protection controls and led first-of-its-kind cross-industry cybersecurity exercise | • Co-Sponsor of the Firm's Culture and Conduct program which sets the tone of what’s expected from our employees • Continued to strengthen the Firm’s commitment to veterans through work with numerous nonprofit organizations, which contributed to our ability to attract and hire veterans • Continued to strengthen leadership bench through focused talent and succession planning, sponsorship of Leadership Edge training, and execution of COO Leaders Program • Seamlessly reorganized Chief Administration Office to split out technology and provided expanded roles for a number of key talent |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 53 |
2016 NAMED EXECUTIVE OFFICER COMPENSATION |
ANNUAL COMPENSATION (FOR PERFORMANCE YEAR) | ||||||||||||||||
Name and principal position | INCENTIVE COMPENSATION | |||||||||||||||
Year | Salary | Cash | RSUs | PSUs1 | Total | |||||||||||
James Dimon | 2016 | $ | 1,500,000 | $ | 5,000,000 | $ | — | $ | 21,500,000 | $ | 28,000,000 | |||||
Chairman and Chief Executive Officer | 2015 | 1,500,000 | 5,000,000 | — | 20,500,000 | 27,000,000 | ||||||||||
2014 | 1,500,000 | 7,400,000 | 11,100,000 | — | 20,000,000 | |||||||||||
Marianne Lake | 2016 | 750,000 | 4,700,000 | 3,525,000 | 3,525,000 | 12,500,000 | ||||||||||
Chief Financial Officer | 2015 | 750,000 | 4,100,000 | 3,075,000 | 3,075,000 | 11,000,000 | ||||||||||
2014 | 750,000 | 3,700,000 | 5,550,000 | — | 10,000,000 | |||||||||||
Mary Callahan Erdoes | 2016 | 750,000 | 7,300,000 | 5,475,000 | 5,475,000 | 19,000,000 | ||||||||||
Chief Executive Officer Asset & Wealth Management | 2015 | 750,000 | 6,900,000 | 5,175,000 | 5,175,000 | 18,000,000 | ||||||||||
2014 | 750,000 | 6,300,000 | 9,450,000 | — | 16,500,000 | |||||||||||
Daniel Pinto2 | 2016 | 8,303,234 | — | 5,348,383 | 5,348,383 | 19,000,000 | ||||||||||
Chief Executive Officer Corporate & Investment Bank | 2015 | 6,884,250 | — | 5,807,875 | 5,807,875 | 18,500,000 | ||||||||||
2014 | 7,415,796 | — | 9,584,204 | — | 17,000,000 | |||||||||||
Matthew Zames | 2016 | 750,000 | 7,300,000 | 5,475,000 | 5,475,000 | 19,000,000 | ||||||||||
Chief Operating Officer | 2015 | 750,000 | 7,100,000 | 5,325,000 | 5,325,000 | 18,500,000 | ||||||||||
2014 | 750,000 | 6,500,000 | 9,750,000 | — | 17,000,000 | |||||||||||
1 | Reflects the grant date fair value. Actual amounts received by NEOs upon vest may range from 0% to 150% of the target shares (excluding accrued dividends), depending upon Firm performance. |
2 | Mr. Pinto’s fixed allowance, which is paid in British pound sterling (GBP), was increased in 2016 to $7,635,000 in connection with a change to denominate in U.S. dollars (USD) (it was previously denominated in GBP), and in light of his increased responsibilities as a Senior Manager pursuant to the U.K. Individual Accountability Regime. His salary of £475,000 is unchanged from 2015 to 2016. Additional information on the composition of Mr. Pinto’s compensation is on page 63 of this proxy statement. |
1. | The Firm grants both cash and equity incentive compensation after a performance year is completed. In both the table above and the SCT, cash incentive compensation paid in 2017 for 2016 performance is shown as 2016 compensation. The table above treats equity awards (restricted stock units and performance share units) similarly, so that equity awards granted in 2017 for 2016 performance is shown as 2016 compensation. The SCT reports the value of equity awards in the year in which they are made. As a result, awards granted in 2016 for 2015 performance are shown in the SCT as 2016 compensation. |
2. | The SCT reports the change in pension value and nonqualified deferred compensation and all other compensation. These amounts are not shown above. |
54 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
4. What are our pay practices? | ||||
We believe our compensation philosophy promotes an equitable and well-governed approach to compensation, including pay practices that attract and retain top talent, are responsive to and aligned with shareholders, and encourage a shared success culture. |
COMPENSATION PHILOSOPHY |
COMPENSATION PHILOSOPHY | ||
Tying pay to performance and aligning with shareholders’ interests | In making compensation-related decisions, we focus on long-term, risk-adjusted performance (including assessment of performance by the Firm’s risk and control professionals) and reward behaviors that generate sustained value for the Firm. This means that compensation should not be overly formulaic, rigid or focused on the short-term. A majority of NEO incentive compensation should be in equity that vests over multiple years. | |
Encouraging a shared success culture | Teamwork should be encouraged and rewarded to foster a “shared success” culture. Contributions should be considered across the Firm, within business units, and at an individual level when evaluating an employee’s performance. | |
Attracting and retaining top talent | Our long-term success depends on the talents of our employees. Our compensation system plays a significant role in our ability to attract, properly motivate and retain top talent. Competitive and reasonable compensation should help attract and retain the best talent to grow and sustain our business. | |
Integrating risk management and compensation | Risk management, compensation recovery, and repayment policies should be robust and disciplined enough to deter excessive risk-taking. HR control forums should generate honest, fair and objective evaluations and identify individuals responsible for meaningful risk-related events and their accountability. Recoupment policies should include recovery of cash and equity compensation. Our pay practices must comply with applicable rules and regulations, both in the U.S. and worldwide. | |
No special perquisites and nonperformance based compensation | Compensation should be straightforward and consist primarily of cash and equity incentives. We do not have special supplemental retirement or other special benefits just for executives, nor do we have any change in control agreements, golden parachutes, merger bonuses, or other special severance benefit arrangements for executives. | |
Maintaining strong governance | Strong corporate governance is fostered by independent Board oversight of our executive compensation program, including defining the Firm’s compensation philosophy, reviewing and approving the Firm’s overall incentive compensation pools, and approving compensation for our Operating Committee, including the terms of compensation awards; CEO compensation is subject to Board ratification. We have a rigorous process in place to review risk and control issues at the Firm, line of business, function, and region level, which can and has led to impacts on compensation pools as well as reductions in compensation at the individual level, in addition to other employee actions. | |
Transparency with shareholders | Transparency to shareholders regarding our executive compensation program is essential. In order to provide shareholders with enough information and context to assess our program and practices, and their effectiveness, we disclose all material terms of our executive pay program, and any actions on our part in response to significant events, as appropriate. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 55 |
1 | Except for select individuals at hire, for one year. |
2 | We do not provide club dues, tax gross-ups for benefits, or special medical benefits. For further information on all other compensation, see footnotes 6, 7, and 9 on pages 62-63. |
3 | Shares that count toward the required ownership levels include shares owned outright and 50% of unvested RSUS and PSUs (but do not include stock options or stock appreciation rights). |
4 | Example assumes individual has achieved minimum ownership requirement of 300K shares, otherwise must retain 75% of shares vesting (37.5K). |
56 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
5. How do we address risk and control? | ||||
Our executive compensation program is designed to hold executives accountable, when appropriate, for meaningful actions or issues that negatively impact business performance in current or future years. |
GOVERNANCE PROCESS |
• | Approving the Firm’s compensation philosophy |
• | Reviewing and approving overall incentive compensation pools (including percentage paid in equity/cash) |
• | Reviewing and approving compensation for our Operating Committee and, for the CEO, making a recommendation to the Board for consideration and ratification by the independent directors |
• | Reviewing and approving the terms of compensation awards, including recovery/clawback provisions |
• | Reviewing the Firm’s compensation practices as they relate to risk and control (including the avoidance of practices that could encourage imprudent and excessive risk-taking) |
• | Reviewing compensation for certain employees who are material risk-takers identified under Federal Reserve standards (“Tier 1”) and/or European Union standards (“Identified Staff”) — a group we refer to as “Designated Employees” |
• | Adopting pay practices that comply with applicable rules and regulations, both in the U.S. and worldwide |
• | Approving the formula, pool calculation and performance goals for the shareholder approved Key Executive Performance Plan (“KEPP”) in support of compliance with Section 162(m)(1) of the U.S. Internal Revenue Code |
INTEGRATING RISK WITH COMPENSATION |
• | Compensation features and elements designed to discourage imprudent risk-taking (e.g., multi-year vesting, clawbacks, prohibition on hedging, etc.) |
• | Integration of risk and control considerations into key HR practices including performance management, compensation, promotion, etc. |
• | Annual incentive pool process for LOBs and Corporate |
• | HR strategic priorities for the upcoming year |
• | Regulatory updates which have impacted or may impact our HR practices in the future |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 57 |
RISK AND CONTROL REVIEW PROCESS | HOLDING INDIVIDUALS ACCOUNTABLE | |||||||||||
1. HR Control Forum Process | 2. Enhanced Performance Reviews | To hold individuals responsible for taking risks inconsistent with the Firm’s risk appetite and to discourage future imprudent behavior, we have policies and procedures that enable us to take prompt and proportionate actions with respect to accountable individuals, including: | ||||||||||
The HR Control Forums, facilitated by HR on a quarterly basis (at LOB and regional level), discuss key risk and control issues surfaced in other committees (Risk Committees, Business Control Committees and other inputs and reports) that may merit consideration with regard to people decisions | • All Designated Employees (including Operating Committee, Tier 1 and Identified Staff) participate in enhanced performance management reviews • Feedback is solicited directly from the Firm’s risk and control professionals who independently assess Designated Employees’ risk and control behavior • This feedback is used to assess whether these employees are meeting our risk and control behavior expectations • This review is critical in helping to identify individuals responsible for significant risk and control behavior, or conduct or supervisory issues, and to hold them accountable • Components of the independent risk and control evaluation apply to over 15,000 employees of the Firm | |||||||||||
I. Reduce or altogether eliminate annual incentive compensation; II. Cancel unvested awards (in full or in part); III. Clawback/Recovery of previously paid compensation (cash and/or equity); | ||||||||||||
Risk Committees, Business Control Committees and Other Sources | ||||||||||||
Summary of Cancellation & Clawbacks | ||||||||||||
ê | Clawback Trigger1 | Vested | Unvested | |||||||||
LOB, Function and Region HR Control Forums | Restatement | ü | ü | |||||||||
Misconduct | ü | ü | ||||||||||
Risk-related | ü | ü | ||||||||||
êé | Performance | ü | ||||||||||
Firmwide HR Control Forums Review outputs from and provides feedback to LOB/ Function/Region Forums | 1 See next page for more details on clawback | |||||||||||
IV. Demotion, negative performance rating or other appropriate employment actions; V. Termination of employment | ||||||||||||
Operating Committee reviews provided to CMDC | ||||||||||||
ê | ê | |||||||||||
Compensation & Management Development Committee | The precise actions we take with respect to accountable individuals are based on circumstances, including the nature of their involvement, the magnitude of the event and the impact on the Firm. | |||||||||||
• The CMDC reviews outcomes of Firmwide HR Control Forums and enhanced performance reviews for the Operating Committee • The outcomes of these Forums are factored into overall Firm/LOB bonus pools and individual incentive compensation, where appropriate | ||||||||||||
3. Designated Employees Exit Reviews | Clawback Disclosure Policy | |||||||||||
Designated Employees1 are reviewed prior to separating from the Firm to determine if they are associated with any risk and control issues that may warrant monitoring for potential forfeiture or clawback of an award | During 2016, we did not take any actions to recover or clawback any incentive compensation from the Operating Committee members and the Firm’s Corporate Controller | |||||||||||
1 Process for OC and Tier 1; this process will also apply to Identified Staff in 2017 |
58 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
CLAWBACK/RECOVERY PROVISIONS |
LONG-STANDING EQUITY CLAWBACK PROVISIONS 1 | AWARD TYPE | ||||
CLAWBACK TYPE | CLAWBACK TRIGGER | VESTED | UNVESTED | ||
Restatement | • • | In the event of a material restatement of the Firm’s financial results for the relevant period (under our recoupment policy adopted in 2006) This provision also applies to cash incentives | ü | ü | |
Misconduct | • | If the employee engaged in conduct detrimental to the Firm that causes material financial or reputational harm to the Firm | ü | ü | |
• | If the award was based on materially inaccurate performance metrics, whether or not the employee was responsible for the inaccuracy | ü | ü | ||
• | If the award was based on material misrepresentation by the employee | ü | ü | ||
• | If the employee is terminated for cause | ü | ü | ||
Risk-related | • | If the employee improperly or with gross negligence failed to identify, raise or assess, in a timely manner and as reasonably expected, issues and/or concerns with respect to risks material to the Firm | ü | ü | |
Protection Based Vesting (contingent upon performance)2,3 | • | If performance in relation to the priorities for their position, or the Firm’s performance in relation to the priorities for which they share responsibility as a member of the Operating Committee, has been unsatisfactory for a sustained period of time | ü | ||
• | If awards granted to participants in a line of business for which the Operating Committee member exercised responsibility were in whole or in part cancelled because the line of business did not meet its annual line of business financial threshold | ü | |||
• | If for any one calendar year during the vesting period, pre-tax pre-provision income is negative, as reported by the Firm | ü | |||
• | If, for the three calendar years preceding the third year vesting date, the Firm does not meet a 15% cumulative return on tangible common equity | ü |
1 | In accordance with U.K. rules, the Firm has a Clawback Policy for relevant Identified Staff that enables us to cancel and/or recover incentive compensation for a minimum period of seven years following the date of the award in certain circumstances, including, but not limited to, when: (1) an individual participated in or was responsible for conduct which resulted in significant loss(es) to the Firm; (2) an individual failed to meet appropriate standards of fitness and propriety set down by the Financial Conduct Authority (“FCA”) and Prudential Regulatory Authority (“PRA”) for regulatory purposes; (3) there is reasonable evidence of misbehavior or misconduct, or material error that would justify, or would have justified had the individual still been employed, termination of employment for cause; and/or (4) any LOB in which the individual is employed (or for which the individual is responsible) suffers a material failure of risk management by reference to the Firm’s risk management standards. Incentive compensation awards made to relevant Identified Staff on or after January 1, 2015, including Mr. Pinto’s incentive compensation awards in January 2017, are subject to this Clawback Policy in addition to the recovery provisions in the table above. |
2 | Unexercisable SARs may be cancelled or deferred if the CEO determines that such action is appropriate based on a set of determination factors, including net income, net revenue, return on equity, earnings per share and capital ratios of the Firm, both on an absolute basis and, as appropriate, relative to peer firms. |
3 | Provisions apply to PSUs and to RSUs granted after 2011 to the Operating Committee and may result in cancellation of up to a total of 50% of the award. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 59 |
RECOVERY PROCEDURES |
• | A formal compensation review would occur following a determination that the cause and materiality of a risk-related loss, issue or other set of facts and circumstances warranted such a review. |
• | The CMDC is responsible for determinations involving Operating Committee members (determinations involving the CEO are subject to ratification by independent members of the Board). The CMDC has delegated authority for determinations involving other employees to the Head of Human Resources. |
NO HEDGING/PLEDGING |
• | Hedging any shares owned outright or through deferred compensation by an Operating Committee member is prohibited |
• | Shares held directly by an Operating Committee member or Board member may not be held in margin accounts or otherwise pledged |
60 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
The Compensation Discussion and Analysis is intended to describe our 2016 performance, the compensation decisions for our Named Executive Officers and the Firm’s philosophy and approach to compensation. The following tables on pages 62-70 present additional information required in accordance with SEC rules, including the Summary Compensation Table. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 61 |
Name and principal position | Year | Salary ($)1 | Bonus ($)2 | Stock awards ($)3 | Option awards ($)3 | Change in pension value and non- qualified deferred compensation earnings ($)4 | All other compen- sation ($) | Total ($) | |||||||||||||||||||||
James Dimon5 | 2016 | $ | 1,500,000 | $ | 5,000,000 | $ | 20,500,000 | $ | — | $ | 31,341 | $ | 205,551 | 6 | $ | 27,236,892 | |||||||||||||
Chairman and CEO | 2015 | 1,500,000 | 5,000,000 | 11,100,000 | — | 9,253 | 621,060 | 18,230,313 | |||||||||||||||||||||
2014 | 1,500,000 | 7,400,000 | 18,500,000 | — | 55,816 | 245,893 | 27,701,709 | ||||||||||||||||||||||
Marianne Lake | 2016 | 750,000 | 4,700,000 | 6,150,000 | — | — | 48,595 | 7 | 11,648,595 | ||||||||||||||||||||
Chief Financial Officer | 2015 | 750,000 | 4,100,000 | 5,550,000 | — | — | 112,350 | 10,512,350 | |||||||||||||||||||||
2014 | 750,000 | 3,700,000 | 4,650,000 | — | — | 50,713 | 9,150,713 | ||||||||||||||||||||||
Mary Callahan Erdoes | 2016 | 750,000 | 7,300,000 | 10,350,000 | — | 32,124 | — | 18,432,124 | |||||||||||||||||||||
CEO AWM | 2015 | 750,000 | 6,900,000 | 9,450,000 | — | — | — | 17,100,000 | |||||||||||||||||||||
2014 | 750,000 | 6,300,000 | 8,550,000 | — | 61,975 | — | 15,661,975 | ||||||||||||||||||||||
Daniel Pinto | 2016 | 8,303,234 | 8 | — | 11,615,750 | — | — | 103,640 | 9 | 20,022,624 | |||||||||||||||||||
CEO CIB | 2015 | 6,884,250 | — | 9,584,204 | — | 875 | 217,881 | 16,687,210 | |||||||||||||||||||||
2014 | 7,415,796 | — | 8,125,000 | — | — | 293,624 | 15,834,420 | ||||||||||||||||||||||
Matthew Zames | 2016 | 750,000 | 7,300,000 | 10,650,000 | — | 11,113 | — | 18,711,113 | |||||||||||||||||||||
Chief Operating Officer | 2015 | 750,000 | 7,100,000 | 9,750,000 | — | 842 | — | 17,600,842 | |||||||||||||||||||||
2014 | 750,000 | 6,500,000 | 9,750,000 | — | 17,313 | — | 17,017,313 |
1 | Salary reflects the actual amount paid in each year. |
2 | Includes amounts awarded, whether paid or deferred. Cash incentive compensation reflects compensation earned in connection to performance year 2016, which was awarded in January 2017. |
3 | Includes amounts awarded during the year shown. Amounts are the fair value on the grant date in accordance with applicable accounting guidance (at target for PSUs awarded in 2016). At the maximum level of performance, the PSU values would be: $30,750,000 for Mr. Dimon; $4,612,500 for Ms. Lake; $7,762,500 for Ms. Erdoes; $8,711,813 for Mr. Pinto; and $7,987,500 for Mr. Zames. The Firm’s accounting for employee stock-based incentives (including assumptions used to value employee stock options and SARs) that have been granted is described in Note 10 to the Firm’s Consolidated Financial Statements in the 2016 Annual Report on pages 197-198. Our Annual Report may be accessed on our website at jpmorganchase.com, under Investor Relations. |
4 | Amounts for years 2016, 2015 and 2014 are the aggregate change in the actuarial present value of the accumulated benefits under all defined benefit pension plans (including supplemental plans). For 2015, Ms. Erdoes had a reduction in pension value in the amount of $(8,563). Amounts shown also include earnings in excess of 120% of the applicable federal rate on deferred compensation balances where the rate of return is not calculated in the same or in a similar manner as earnings on hypothetical investments available under the Firm’s qualified plans. For Mr. Pinto this amount is $0 for 2016, $875 for 2015, and $0 for 2014 and for all other NEOs, this amount was $0 for each of 2016, 2015, and 2014. |
5 | Mr. Dimon’s 2016 reported compensation is lower in the SCT ($27.2 million) than in the annual compensation table on page 54 ($28.0 million) due to a change in his year-over-year pay being delivered in equity. Pursuant to SEC rules, equity received for performance year 2015 ($20.5 million), which was granted in January 2016, is included in the 2016 SCT. For performance year 2016, Mr. Dimon’s equity compensation ($21.5 million, which was granted in January 2017), will be reported in the 2017 SCT. A portion of Mr. Dimon’s performance year 2016 compensation was not awarded in equity ($5 million was awarded in the form of a cash incentive with no year-over-year change), and is therefore included in the 2016 SCT. The SCT also includes the value of All Other Compensation (approximately $206,000). |
6 | The “All other compensation” column for Mr. Dimon includes: $65,933 for personal use of corporate aircraft; $31,779 for personal use of cars; $102,589 for the cost of residential and related security paid by the Firm; and $5,250 related to tax planning and compliance assistance in connection with business travel. Mr. Dimon’s personal use of corporate aircraft and cars, and certain related security, is required pursuant to security measures approved by the Board. |
62 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | Aircraft: operating cost per flight hour for the aircraft type used, developed by an independent reference source, including fuel, fuel additives and lubricants; landing and parking fees; crew expenses; small supplies and catering; maintenance, labor and parts; engine restoration costs; and a maintenance service plan. |
• | Cars: annual lease valuation of the assigned cars; annual insurance premiums; fuel expense; estimated annual maintenance; other miscellaneous expense; and annual drivers’ compensation, including salary, overtime, benefits and bonus. The resulting total is allocated between personal and business use based on mileage. |
7 | The “All other compensation” column for Ms. Lake includes $23,803 in employer contributions to a non-U.S. defined contribution plan and $24,792 for tax settlement payments made on behalf of Ms. Lake in connection with her international assignment at the Firm’s request and consistent with the Firm’s policy for employees working on international assignments. The Firm’s expatriate assignment policy provides that the Firm will be responsible for any incremental U.S. and state income taxes due on home-country employer-provided benefits that would not otherwise be taxable to the employee in their home country. |
8 | Since Mr. Pinto is located in London, the terms and composition of his compensation reflect the requirements of local regulations, including changes that came into effect in 2014 to comply with the Capital Requirements Directive IV. These requirements include that at least 60% of his incentive compensation is deferred, and that his incentive compensation is not more than twice his fixed compensation in respect of any given performance year. Mr. Pinto’s fixed compensation is comprised of salary and a cash fixed allowance payable bi-annually. Mr. Pinto’s salary of £475,000 is denominated and paid in GBP and is unchanged from 2015 to 2016. Mr. Pinto’s fixed allowance, which is paid in GBP, was increased in 2016 to $7,635,000 in connection with a change to denominate in USD (it was previously denominated in GBP), and in light of his increased responsibilities as a Senior Manager pursuant to the U.K. Individual Accountability Regime. The CMDC elected to defer 100% of Mr. Pinto’s variable compensation into equity – 50% into RSUs and 50% into PSUs – in order to maintain a comparable deferred equity portion to similarly situated Firm employees. For the purposes of this table, a blended applicable rate of 1.40681 U.S. dollars per pound sterling, which was based on a 10-month average rate has been used to convert Mr. Pinto’s salary to U.S. dollars for 2016. The blended applicable rates used to convert Mr. Pinto’s salary and fixed allowance for 2015 and 2014 were 1.54702 and 1.66647 U.S. dollars per pound sterling, respectively. |
9 | The “All other compensation” column for Mr. Pinto includes $15,208 in employer contributions to a non-U.S. defined contribution plan; $13,854 in tax compliance assistance for non-U.K. business travel; $9,340 for personal use of cars; $12,061 for spousal travel related to business events; and $53,177 for interest accrued on balances from mandatory bonus deferrals awarded prior to 2016. During 2016, the applicable rate of interest on mandatory deferral balances was 1.97% for the first six months and 1.60% for the last six months of 2016. |
Name | Grant date | Estimated Future Payout Under Equity Incentive Plan Awards (PSUs)2 | Stock awards (RSUs)3 | Grant date fair value ($)4 | |||||||||||
Threshold (#) | Target (#) | Maximum (#) | Number of shares of restricted stock or units (#) | ||||||||||||
James Dimon | 1/19/2016 | — | 358,142 | 537,213 | — | $ | 20,500,000 | ||||||||
Marianne Lake | 1/19/2016 | — | — | — | 53,722 | 3,075,000 | |||||||||
1/19/2016 | — | 53,722 | 80,583 | — | 3,075,000 | ||||||||||
Mary Callahan Erdoes | 1/19/2016 | — | — | — | 90,409 | 5,175,000 | |||||||||
1/19/2016 | — | 90,409 | 135,614 | — | 5,175,000 | ||||||||||
Daniel Pinto | 1/19/2016 | — | — | — | 101,466 | 5,807,875 | |||||||||
1/19/2016 | — | 101,466 | 152,199 | — | 5,807,875 | ||||||||||
Matthew Zames | 1/19/2016 | — | — | — | 93,030 | 5,325,000 | |||||||||
1/19/2016 | — | 93,030 | 139,545 | — | 5,325,000 |
1 | Equity grants are awarded as part of the annual compensation process and as part of employment offers for new hires. Grants made as part of the annual incentive compensation process are generally awarded in January after earnings are released. RSUs and PSUs carry no voting rights. |
2 | PSUs vest on March 25, 2019, and are subject to a two-year holding period. Each PSU represents the right to receive one share of common stock on the vesting date. The ultimate number of PSUs that will vest will be determined by the Firm’s performance for each applicable performance year, plus any accumulated reinvested dividend equivalent shares. The dividend equivalent shares, if any, will be based on: (1) the number of PSUs earned at vesting; and (2) on dividends that would have been paid on the the Firm's common stock during the vesting period as of each dividend payment date, if any. |
3 | RSUs vest in two equal installments on January 13, 2018 and 2019. Under rules applicable in the U.K., for Mr. Pinto, RSUs are subject to a six-month holding period post-vesting. Each RSU represents the right to receive one share of common stock on the vesting date and non-preferential dividend equivalents, payable in cash, equal to any dividends paid on the Firm’s common stock during the vesting period. |
4 | Represents the aggregate grant date fair value for RSUs and PSUs. The aggregate grant date fair value is based on the average of the high and the low prices of JPMorgan Chase common stock on the grant date multiplied by the number of shares granted (for RSUs) or target number of PSUs. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 63 |
Option awards | Stock awards | ||||||||||||||||||||||||||
Name | Option/stock award grant date1 | Number of securities underlying unexercised options: # exercisable1,2 | Number of securities underlying unexercised options: # unexercisable1,2 | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested1,2 | Number of unearned performance shares or units of stock that have not vested1,2,3 | ||||||||||||||||||||
James Dimon | |||||||||||||||||||||||||||
1/22/2008 | 2,000,000 | — | a | $ | 39.83 | 1/22/2018 | — | — | |||||||||||||||||||
2/3/2010 | 563,562 | — | b | 43.20 | 1/20/2020 | — | — | ||||||||||||||||||||
2/16/2011 | 367,377 | — | b | 47.73 | 2/16/2021 | — | — | ||||||||||||||||||||
1/18/2012 | 449,944 | 112,486 | b | 35.61 | 1/18/2022 | — | — | ||||||||||||||||||||
1/22/2014 | — | — | — | — | 159,828 | c | — | ||||||||||||||||||||
1/20/2015 | — | — | — | — | 198,546 | c | — | ||||||||||||||||||||
1/19/2016 | — | — | — | — | — | 548,781 | d | ||||||||||||||||||||
Total awards (#) | 3,380,883 | 112,486 | 358,374 | 548,781 | |||||||||||||||||||||||
Market value ($)4 | $ | 154,173,106 | $ | 5,700,790 | $ | 30,924,092 | $47,354,312 | ||||||||||||||||||||
Marianne Lake | |||||||||||||||||||||||||||
1/18/2012 | 50,619 | 16,873 | b | $ | 35.61 | 1/18/2022 | — | — | |||||||||||||||||||
1/17/2013 | 205,104 | 136,738 | b | 46.58 | 1/17/2023 | — | — | ||||||||||||||||||||
1/22/2014 | — | — | — | — | 40,173 | c | — | ||||||||||||||||||||
1/20/2015 | — | — | — | — | 99,273 | c | — | ||||||||||||||||||||
1/19/2016 | — | — | — | — | 53,722 | c | 82,319 | d | |||||||||||||||||||
Total awards (#) | 255,723 | 153,611 | 193,168 | 82,319 | |||||||||||||||||||||||
Market value ($)4 | $ | 10,710,051 | $ | 6,284,990 | $ | 16,668,467 | $7,103,307 | ||||||||||||||||||||
Mary Callahan Erdoes | |||||||||||||||||||||||||||
1/20/2009 | 100,000 | — | b | $ | 19.49 | 1/20/2019 | — | — | |||||||||||||||||||
1/19/2011 | 230,770 | — | b | 44.29 | 1/19/2021 | — | — | ||||||||||||||||||||
1/18/2012 | — | 44,995 | b | 35.61 | 1/18/2022 | — | — | ||||||||||||||||||||
1/17/2013 | 125,523 | 83,683 | b | 46.58 | 1/17/2023 | — | — | ||||||||||||||||||||
1/22/2014 | — | — | — | — | 73,867 | c | — | ||||||||||||||||||||
1/20/2015 | — | — | — | — | 169,032 | c | — | ||||||||||||||||||||
1/19/2016 | — | — | — | — | 90,409 | c | 138,534 | d | |||||||||||||||||||
Total awards (#) | 456,293 | 128,678 | 333,308 | 138,534 | |||||||||||||||||||||||
Market value ($)4 | $ | 21,356,858 | $ | 5,603,399 | $ | 28,761,147 | $11,954,099 |
64 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
Option awards | Stock awards | ||||||||||||||||||||||||||
Name | Option/stock award grant date1 | Number of securities underlying unexercised options: # exercisable1,2 | Number of securities underlying unexercised options: # unexercisable1, 2 | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested1,2 | Number of unearned performance shares or units of stock that have not vested1,2,3 | ||||||||||||||||||||
Daniel Pinto | |||||||||||||||||||||||||||
10/18/2007 | 200,000 | — | b | $ | 45.79 | 10/18/2017 | — | — | |||||||||||||||||||
1/20/2010 | 85,000 | — | b | 43.20 | 1/20/2020 | — | — | ||||||||||||||||||||
1/19/2011 | 75,000 | — | b | 44.29 | 1/19/2021 | — | — | ||||||||||||||||||||
1/18/2012 | 65,692 | 16,423 | b | 35.61 | 1/18/2022 | — | — | ||||||||||||||||||||
1/17/2013 | 62,761 | 41,842 | b | 46.58 | 1/17/2023 | — | — | ||||||||||||||||||||
1/22/2014 | — | — | — | — | 42,117 | e | — | ||||||||||||||||||||
1/20/2015 | — | — | — | — | 171,433 | c | — | ||||||||||||||||||||
1/19/2016 | — | — | — | — | 101,466 | c | 155,477 | d | |||||||||||||||||||
Total awards (#) | 488,453 | 58,265 | 315,016 | 155,477 | |||||||||||||||||||||||
Market value ($)4 | $ | 20,734,160 | $ | 2,493,863 | $ | 27,182,731 | $13,416,110 | ||||||||||||||||||||
Matthew Zames | |||||||||||||||||||||||||||
1/18/2012 | — | 16,423 | b | $ | 35.61 | 1/18/2022 | — | — | |||||||||||||||||||
1/17/2013 | — | 41,842 | b | 46.58 | 1/17/2023 | — | — | ||||||||||||||||||||
1/22/2014 | — | — | — | — | 84,234 | c | — | ||||||||||||||||||||
1/20/2015 | — | — | — | — | 174,399 | c | — | ||||||||||||||||||||
1/19/2016 | — | — | — | — | 93,030 | c | 142,550 | d | |||||||||||||||||||
Total awards (#) | — | 58,265 | 351,663 | 142,550 | |||||||||||||||||||||||
Market value ($)4 | $ | — | $ | 2,493,863 | $ | 30,345,000 | $12,300,640 |
1 | The awards set forth in the table have the following vesting schedules: |
a | In January 2008, the Firm awarded to its Chairman and Chief Executive Officer up to 2 million SARs. The terms of this award are distinct from, and more restrictive than, other equity grants regularly awarded by the Firm. On July 15, 2014, the CMDC and Board of Directors determined that all requirements for the vesting of the 2 million SAR awards had been met and thus, the awards became exercisable. The SARs, which will expire in January 2018, have an exercise price of $39.83 (the price of JPMorgan Chase common stock on the date of grant). The expense related to this award was dependent on changes in fair value of the SARs through July 15, 2014 (the date when the vested number of SARs was determined), and the cumulative expense was recognized ratably over the service period, which was initially assumed to be five years but, effective in the first quarter of 2013, had been extended to six and one-half years. |
b | Five equal installments, in years one, two, three, four and five |
c | Two equal installments, in years two and three |
d | Vests on March 25, 2019 |
e | Two equal installments, in 18 months and 36 months |
2 | Value based on $86.29, the closing price per share of our common stock on December 31, 2016. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 65 |
Option awards | Stock awards | ||||||||||||
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($)1 | Number of shares acquired on vesting (#) | Value realized on vesting ($)2 | |||||||||
James Dimon | — | $ | — | 267,170 | $ | 15,574,007 | |||||||
Marianne Lake | 89,000 | 2,037,335 | 51,337 | 2,992,562 | |||||||||
Mary Callahan Erdoes | 279,430 | 7,556,797 | 152,763 | 8,904,937 | |||||||||
Daniel Pinto | 100,000 | 1,538,500 | 41,596 | 2,424,735 | |||||||||
Matthew Zames | 52,344 | 1,030,815 | 182,452 | 10,635,583 |
1 | Values were determined by multiplying the number of shares of our common stock, to which the exercise of the options related, by the difference between the per-share fair market value of our common stock on the date of exercise and the exercise price of the options. |
2 | Values were determined by multiplying the number of shares or units, as applicable, that vested by the per-share fair market value of our common stock on the vesting date. |
Name | Plan name | Number of years of credited service (#) | Present value of accumulated benefit ($) | ||||||
James Dimon | Retirement Plan | 16 | $ | 155,502 | |||||
Excess Retirement Plan | 16 | 393,975 | |||||||
Marianne Lake | — | — | — | ||||||
Mary Callahan Erdoes | Retirement Plan | 20 | 284,328 | ||||||
Excess Retirement Plan | 20 | 25,993 | |||||||
Daniel Pinto | — | — | — | ||||||
Matthew Zames | Retirement Plan | 12 | 75,130 |
• | Excess Retirement Plan — Benefits were determined under the same terms and conditions as the Retirement Plan, but reflecting base salary in excess of IRS limits up to $1 million and benefit amounts in excess of IRS limits. Benefits are generally payable in a lump sum in the year following termination. Accruals under the plan were discontinued as of May 1, 2009. |
66 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
Name | Aggregate earnings (loss) in last fiscal year ($)1 | Aggregate balance at last fiscal year–end ($) | |||||||
James Dimon | $ | 1,080 | $ | 141,340 | |||||
Marianne Lake | — | — | |||||||
Mary Callahan Erdoes | — | — | |||||||
Daniel Pinto | 529 | 21,261 | |||||||
Matthew E. Zames | — | — |
1 | The Deferred Compensation Plan allows participants to direct their deferrals among several investment choices, including JPMorgan Chase common stock; an interest income fund and the JPMorgan Chase general account of Prudential Insurance Company of America; and Hartford funds indexed to fixed income, bond, balanced, S&P 500, Russell 2000 and international portfolios. In addition, there are balances in deemed investment choices from heritage company plans that are no longer open to new deferrals. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 67 |
No golden parachute agreements | • NEOs are not entitled to any accelerated cash/equity payments or special benefits upon a change in control |
No employment agreements | • All of the U.S. based NEOs are “at will” employees and are not covered by employment agreements • Ms. Lake and Mr. Pinto have terms of employment that reflect applicable U.K. legal standards |
No special cash severance | • Severance amounts for NEOs are capped at one-year salary, not to exceed $400,000 (or £275,000 in the case of Ms. Lake and Mr. Pinto) |
No special executive benefits | • NEOs are not entitled to any special benefits upon termination |
68 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
Termination reason1 | ||||||||||||||||||||||||||
Name | Involuntary without cause ($)2 | Death/Disability ($)3 | Resignation ($)4 | Government office ($)5 | Change in control ($) | |||||||||||||||||||||
James Dimon | Severance and other | $ | 376,923 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Option awards | 5,700,790 | 5,700,790 | 5,700,790 | — | — | |||||||||||||||||||||
Stock awards | 30,924,092 | 30,924,092 | 30,924,092 | 30,924,092 | — | |||||||||||||||||||||
Performance share units6 | 36,831,126 | 36,831,126 | 36,831,126 | 36,831,126 | — | |||||||||||||||||||||
Other deferred awards | — | — | — | — | — | |||||||||||||||||||||
Marianne Lake | Severance and other | 346,783 | — | — | — | — | ||||||||||||||||||||
Option awards | 3,570,057 | 6,284,990 | 6,284,990 | — | — | |||||||||||||||||||||
Stock awards | 16,668,467 | 16,668,467 | 16,668,467 | 16,668,467 | — | |||||||||||||||||||||
Performance share units6 | 5,524,741 | 5,524,741 | 5,524,741 | 5,524,741 | — | |||||||||||||||||||||
Other deferred awards | — | — | — | — | — | |||||||||||||||||||||
Mary Callahan Erdoes | Severance and other | 400,000 | — | — | — | — | ||||||||||||||||||||
Option awards | 3,941,853 | 5,603,399 | 5,603,399 | — | — | |||||||||||||||||||||
Stock awards | 28,761,147 | 28,761,147 | 28,761,147 | 28,761,147 | — | |||||||||||||||||||||
Performance share units6 | 9,297,612 | 9,297,612 | 9,297,612 | 9,297,612 | — | |||||||||||||||||||||
Other deferred awards | — | — | — | — | — | |||||||||||||||||||||
Daniel Pinto | Severance and other | 346,783 | — | — | — | — | ||||||||||||||||||||
Option awards | 1,663,091 | 2,493,863 | 2,493,863 | — | — | |||||||||||||||||||||
Stock awards | 27,182,731 | 27,182,731 | 27,182,731 | 27,182,731 | — | |||||||||||||||||||||
Performance share units6 | 10,434,708 | 10,434,708 | 10,434,708 | 10,434,708 | — | |||||||||||||||||||||
Other deferred awards7 | 2,571,887 | 2,571,887 | 2,571,887 | 2,571,887 | — | |||||||||||||||||||||
Matthew Zames | Severance and other | 276,923 | — | — | — | — | ||||||||||||||||||||
Option awards | 1,663,091 | 2,493,863 | — | — | — | |||||||||||||||||||||
Stock awards | 30,345,000 | 30,345,000 | — | 30,345,000 | — | |||||||||||||||||||||
Performance share units6 | 9,567,154 | 9,567,154 | — | 9,567,154 | — | |||||||||||||||||||||
Other deferred awards | — | — | — | — | — |
1 | “Option awards,” “Stock awards” and “Performance share units” refer to previously granted, outstanding equity awards. NEOs are not entitled to any additional equity awards in connection with a potential termination. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 69 |
2 | Involuntary terminations without cause include involuntary terminations due to redundancies and involuntary terminations without alternative employment. For "Severance and other", amounts shown represent severance under the Firm’s broad-based U.S. Severance Pay Plan, or the U.K. Discretionary Redundancy Policy in the case of Ms. Lake and Mr. Pinto. Base salary greater than $400,000 per year, or £275,000 in the case of Ms. Lake and Mr. Pinto, is disregarded for purposes of determining severance amounts. The rate used to convert Ms. Lake’s and Mr. Pinto’s eligible severance to U.S. dollars was the blended spot rate for the month of December 2016, which was $1.26103 U.S. dollars per pound sterling. |
3 | Vesting restrictions on stock awards and performance share unit awards (and for Mr. Pinto, “Other deferred awards”) lapse immediately upon death. In the case of disability, stock awards continue to vest pursuant to their original vesting schedule. In the case of death or disability, option and SAR awards may be exercised for a specified period to the extent then exercisable or become exercisable during such exercise period. |
4 | For employees in good standing who have resigned and have met “full-career eligibility” or other acceptable criteria, awards continue to vest over time on their original schedule, provided that the employees, for the remainder of the vesting period, do not perform services for a financial services company or work in their profession (whether or not for a financial services company); provided that employees may work for a government, education or not-for-profit organization. The awards shown represent RSUs and PSUs that would continue to vest and SARs that would become and remain exercisable through an accelerated expiration date because the Named Executive Officers, other than Mr. Zames, have met the full-career eligibility criteria. The awards are subject to continuing post-employment obligations to the Firm during this period. In the case of Mr. Zames, the awards shown, representing RSUs, PSUs and SARs, would not continue to vest because he has not met the “full-career eligibility” criteria. |
5 | Under the terms of the Government Office provisions, Named Executive Officers would be eligible to receive the full value of their stock award should they resign to accept a government office only if government ethics or conflicts of interest laws required divestiture of unvested equity awards and did not allow continued vesting; otherwise their awards would continue to vest over time on their original schedule. |
6 | Represents the value of PSUs granted on January 19, 2016, assuming: (a) maximum payout related to 2016 performance year; (b) target payout related to 2017 and 2018 performance year; and (c) accumulated reinvested dividend equivalent shares as of December 31, 2016. |
7 | Amounts shown represent balances as of December 31, 2016, under the mandatory deferral of cash bonus applicable to Mr. Pinto. For employees in good standing who have resigned and have met “full-career eligibility” or other acceptable criteria, mandatory cash deferral awards continue to vest over time on their original schedule; such awards would continue to vest because Mr. Pinto has met the “full-career eligibility” criteria. The mandatory cash deferral awards are subject to continuing post-employment obligations to the Firm during this period. |
70 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
SECURITY OWNERSHIP | |||||||||||||||
Beneficial ownership | |||||||||||||||
Name | Common Stock (#)1 | Options/SARs/Warrants exercisable within 60 days (#) | Total beneficial ownership (#) | Additional underlying stock units (#)2 | Total (#) | ||||||||||
Linda B. Bammann | 65,986 | 0 | 65,986 | 15,482 | 81,468 | ||||||||||
James A. Bell | 135 | 0 | 135 | 25,032 | 25,167 | ||||||||||
Crandall C. Bowles | 6,280 | 0 | 6,280 | 80,351 | 86,631 | ||||||||||
Stephen B. Burke | 32,107 | 0 | 32,107 | 97,944 | 130,051 | ||||||||||
Todd A. Combs | 16 | 22,725 | 22,741 | 2,967 | 25,708 | ||||||||||
James S. Crown 3 | 12,623,037 | 0 | 12,623,037 | 167,922 | 12,790,959 | ||||||||||
James Dimon 4 | 6,856,729 | 3,493,369 | 10,350,098 | 729,645 | 11,079,743 | ||||||||||
Mary Callahan Erdoes | 326,878 | 543,129 | 870,007 | 397,774 | 1,267,781 | ||||||||||
Timothy P. Flynn | 10,000 | 0 | 10,000 | 28,817 | 38,817 | ||||||||||
Laban P. Jackson, Jr. | 30,863 | 1,346 | 32,209 | 142,995 | 175,204 | ||||||||||
Marianne Lake | 44,711 | 340,965 | 385,676 | 242,227 | 627,903 | ||||||||||
Michael A. Neal | 9,050 | 0 | 9,050 | 20,063 | 29,113 | ||||||||||
Daniel Pinto | 368,991 | 325,797 | 694,788 | 418,384 | 1,113,172 | ||||||||||
Lee R. Raymond 5 | 1,850 | 0 | 1,850 | 223,861 | 225,711 | ||||||||||
William C. Weldon | 1,200 | 0 | 1,200 | 88,179 | 89,379 | ||||||||||
Matthew Zames | 332,424 | 0 | 332,424 | 405,771 | 738,195 | ||||||||||
All directors and current executive officers as a group (21 persons) 3, 5 | 21,422,140 | 5,765,575 | 27,187,715 | 4,123,123 | 31,310,838 |
1 | Shares owned outright, except as otherwise noted. Directors agree to retain all shares of common stock of JPMorgan Chase purchased on the open market or received pursuant to their service as a Board member for as long as they serve on the Board. |
2 | Amounts include for directors and executive officers, shares or deferred stock units, receipt of which has been deferred under deferred compensation plan arrangements. For executive officers, amounts also include unvested RSUs and unvested PSUs (including accumulated reinvested dividend equivalent shares), as well as share equivalents attributable under the JPMorgan Chase 401(k) Savings Plan. The ultimate number of PSUs earned at vesting is formulaically determined, with potential payout value ranging from 0% to 150%. Additional details on the PSU program are provided on page 46 in this proxy statement. |
3 | Includes 149,131 shares Mr. Crown owns individually; 26,330 shares owned by Mr. Crown’s spouse; and 38,140 shares held in trusts for the benefit of his children. None of such shares are pledged or held in margin accounts. |
4 | Includes 115,800 shares owned by entities as to which Mr. Dimon disclaims beneficial ownership, except to the extent of his pecuniary interest therein. |
5 | As of February 28, 2017, Mr. Raymond held 2,000 depositary shares, each representing a one-tenth interest in a share of JPMorgan Chase’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I (“Series I Preferred”). All directors and current executive officers as a group own 2,000 depositary shares of Series I Preferred. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 71 |
Name of beneficial owner | Address of beneficial owner | Common stock owned (#) | Percent owned (%) | |
The Vanguard Group1 | 100 Vanguard Blvd. Malvern, PA 19355 | 237,846,805 | 6.6 | |
BlackRock, Inc.2 | 55 East 52nd Street New York, NY 10055 | 236,398,832 | 6.6 |
1 | The Vanguard Group owns the above holdings in its capacity as an investment advisor in accordance with SEC Rule 13d-1(b)(1)(ii)(E). According to the Schedule 13G dated February 10, 2017, filed with the SEC, in the aggregate, Vanguard and the affiliated entities included in the Schedule 13G (“Vanguard”) have sole dispositive power over 231,558,388 shares, shared dispositive power over 6,288,417 shares, sole voting power over 5,666,568 shares, and shared voting power over 671,098 shares of our common stock. |
2 | BlackRock, Inc. owns the above holdings in its capacity as a parent holding company or control person in accordance with SEC Rule 13d-1(b)(1)(ii)(G). According to the Schedule 13G dated January 24, 2017, filed with the SEC, in the aggregate, BlackRock and the affiliated entities included in the Schedule 13G (“BlackRock”) have sole dispositive power over 236,329,452 shares, sole voting power over 204,240,295 shares and shared voting and dispositive power over 69,380 shares of our common stock. |
72 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
POLICIES AND PROCEDURES FOR APPROVAL OF RELATED PERSONS TRANSACTIONS |
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND 5% SHAREHOLDERS |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 73 |
COMPENSATION & MANAGEMENT DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
74 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
ü | RECOMMENDATION: Vote FOR ratification of PwC |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 75 |
EXECUTIVE SUMMARY |
ü | The Board of Directors recommends that shareholders vote FOR ratification of PwC as the Firm’s independent registered public accounting firm for 2017. |
FEES PAID TO PRICEWATERHOUSECOOPERS LLP |
($ in millions) | 2016 | 2015 | ||||||
Audit1 | $ | 64.0 | $ | 64.3 | ||||
Audit-related | 25.3 | 24.4 | ||||||
Tax | 3.0 | 4.8 | ||||||
All other | — | — | ||||||
Total1 | $ | 92.3 | $ | 93.5 |
1. | Audit fees for 2015 have been adjusted to conform with the 2016 presentation. |
76 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
AUDIT COMMITTEE APPROVAL POLICIES AND PROCEDURES |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 77 |
• | the independent registered public accounting firm’s qualifications and independence |
• | the performance of the internal audit function and the independent registered public accounting firm, and |
• | management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of the Firm; assure the integrity of the Firm’s financial statements; and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations |
• | the professional qualifications of PwC, and that of the lead audit partner and other key engagement partners; |
• | PwC’s historical and current performance on the Firm’s audit, including the extent and quality of PwC’s communications with the Audit Committee and the Firm’s management; |
• | an analysis of PwC’s known legal risks and significant proceedings that may impair PwC’s ability to perform the Firm’s annual audit; |
• | data relating to audit quality and performance, including recent PCAOB reports on PwC and its global network of firms, and the results of peer review and self-review examinations; |
• | the appropriateness of PwC’s fees, both on an absolute basis and as compared with fees paid by certain peer banking firms; |
• | PwC’s independence policies and its processes for maintaining its independence; |
• | PwC’s tenure as the Firm’s independent auditor and the depth of its understanding of the Firm’s global businesses, operations and systems, and U.S. GAAP and U.S. regulatory policies and practices, including the potential effect on the financial statements of the major risks and exposures facing the Firm, and internal control over financial reporting; |
• | PwC’s demonstrated professional skepticism and objectivity, including the fresh perspectives brought through the periodic required rotation of the lead |
78 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | PwC’s capability, expertise and the efficiency in which it handles the breadth and complexity of the Firm’s global operations, including the expertise and capability of PwC’s lead audit partner for the Firm; and |
• | the advisability and potential impact of selecting a different independent public accounting firm. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 79 |
80 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
ü | RECOMMENDATION: The Board recommends that shareholders select “One Year” when voting on the frequency of advisory resolution to approve executive compensation. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 81 |
ADVISORY RESOLUTION |
ü | The Board recommends that shareholders select “One Year” when voting on the frequency of advisory resolution to approve executive compensation. |
82 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 83 |
BOARD RESPONSE TO PROPOSAL 5 |
• The Board of Directors has a fiduciary duty to act as it believes to be in the best interests of the Firm and its shareholders, and should retain the flexibility to determine the leadership structure that will best serve those interests. |
• Pursuant to the Firm's Corporate Governance Principles, the Board annually reviews its leadership structure and has determined that the Board’s structure provides the independent leadership and management oversight sought by the proposal. |
• The Board regularly seeks and considers feedback from shareholders on the Firm’s leadership structure. |
• The Board’s belief in the importance of retaining the flexibility to determine the best leadership structure is consistent with the policies and practices at other large companies. |
84 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
û | The Board of Directors recommends a vote AGAINST this proposal. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 85 |
BOARD RESPONSE TO PROPOSAL 6 |
• Our Government Office distribution provisions do not create a windfall. There is no additional reward for entering government service. |
• The Government Office terms of our equity plan are the same for all participants. |
• Our Government Office compensation provisions are intended to help us attract talented and dedicated people. |
• We have already enhanced our proxy disclosure about the Government Office provisions in response to shareholder feedback. |
86 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
û | The Board of Directors recommends a vote AGAINST this proposal. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 87 |
BOARD RESPONSE TO PROPOSAL 7 |
• Our long-standing clawback provisions, which include reduction, cancellation and recovery, are broader and more flexible than the proposed amendment – and they work. |
• Strong ownership and retention requirements further strengthen the connection between executives and shareholders. |
• Risk and control issues (including settlement payments and fines) are integrated into our compensation framework. |
• The proposed amendment is overly prescriptive and would put JPMorgan Chase at a significant competitive disadvantage in attracting and retaining talent. |
1. | Reduction of annual incentive compensation (in full or in part); |
2. | Cancellation of unvested awards (in full or in part); |
3. | Recovery of previously paid compensation (cash and/or vested equity); and |
4. | Taking appropriate employment actions (e.g., termination of employment, demotion, negative rating). |
88 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
û | The Board of Directors recommends a vote AGAINST this proposal. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 89 |
90 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
BOARD RESPONSE TO PROPOSAL 8 |
• Employees are our greatest asset, and we strive to attract talent from the broadest pool to foster innovation, creativity and productivity. We agree with the proponent that creating a diverse, inclusive and fair environment is critical to our success. |
• Our commitment to fairness in our workforce and workplace practices also extends to how we compensate our employees, in accordance with our overall pay for performance philosophy. |
• We have also established a series of initiatives and programs to help women achieve their career goals and aspirations and remove any barriers that may exist. |
• We continue to receive recognition in the market place for our diversity and inclusion practices. |
• The supporting statement of the proposal is overly prescriptive in its definition of an “adequate report”. |
• | Women’s Interactive Network BRG chapters with over 22,000 women; |
• | Our SAGE BRG for administrative professionals; |
• | Women on the Move; |
• | Maternity Mentors; |
• | Increased parental leave; |
• | The JPMC ReEntry Program; |
• | Lean In Circles; |
• | Winning Women on Campus; and |
• | Our “30-5-1” Campaign, which is a new initiative to recognize talented women throughout the Firm and celebrate successes. |
• | 100% rating on the Corporate Equality Index; |
• | Perfect score on the Disability Equality Index survey; |
• | Named as one of the 50 Best Companies for Diversity by Black Enterprise, Top 50 Employers by Careers & The Disabled magazine, 100 Best Companies by Working Mother, Top 25 Best Companies for Multicultural Women; |
• | Diversity Corporation of the Year by the National Business Inclusion Consortium and National Gay & Lesbian Chamber of Commerce; |
• | Employer of Choice & Top 3 company in Diversity by HRD Magazine (Singapore); |
• | Ranked 3rd in the Stonewall list of the Top 100 Employers for LGBT employees (2017); and |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 91 |
• | The Helen Keller Achievement award. |
û | The Board of Directors recommends a vote AGAINST this proposal. |
92 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
• | Is it reasonable for JPMorgan to assert it knows the will of undecided voters (and to artificially construe abstentions in favor of management)? |
• | Depressing the appearance of support for stockholder concerns. |
• | Subverting vote outcomes. |
• | Distorting communication. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 93 |
BOARD RESPONSE TO PROPOSAL 9 |
• Changing the voting procedure would not be in the best interests of shareholders. |
• The current voting standard contained in our By-Laws treats shareholder and management proposals equally. |
• Counting abstention votes honors the intent of the shareholders. |
• Our vote counting methodology is consistent with Delaware law and is followed by the majority of Delaware corporations. |
û | The Board of Directors recommends a vote AGAINST this proposal. |
94 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
BOARD RESPONSE TO PROPOSAL 10 |
• JPMorgan Chase provides for shareholder rights to call a special meeting and act by written consent while protecting the interests of the Firm and all of our shareholders. |
• The ownership threshold avoids the waste of corporate resources in addressing narrowly supported interests. |
• JPMorgan Chase provides significant opportunities for shareholders to engage with management and the Board. |
• The Firm has strong corporate governance standards. |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 95 |
û | The Board of Directors recommends a vote AGAINST this proposal. |
96 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
WHO CAN VOTE |
VOTING YOUR PROXY |
REVOKING YOUR PROXY |
BOARD RECOMMENDATIONS |
MATTERS TO BE PRESENTED |
HOW VOTES ARE COUNTED |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 97 |
• | Election of directors — To be elected, each nominee must receive the affirmative vote of a majority of the votes cast at the meeting in respect of his or her election. If an incumbent nominee is not elected by the requisite vote, he or she must tender his or her resignation, and the Board of Directors, through a process managed by the Corporate Governance & Nominating Committee, will decide whether to accept the resignation at its next regular meeting. Broker |
• | Other proposals — The affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote on the proposal is required to approve all other proposals. In determining whether each of the other proposals has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote AGAINST the proposal. Broker non-votes will have no impact since they are not considered shares entitled to vote on the proposal. |
COST OF THIS PROXY SOLICITATION |
ATTENDING THE ANNUAL MEETING |
98 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS |
ELECTRONIC DELIVERY OF PROXY MATERIALS AND ANNUAL REPORT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 99 |
DOCUMENTS AVAILABLE |
100 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
PROXY STATEMENT PROPOSALS |
OTHER PROPOSALS AND NOMINATIONS |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 101 |
1. | In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s results, including the results of the lines of business, on a “managed” basis, which are non-GAAP financial measures. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the reportable business segments) on a fully taxable-equivalent (“FTE”) basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. These non-GAAP financial measures allow management to assess the comparability of revenue year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. For a reconciliation of the Firm’s results from a reported to managed basis, see page 48 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”).2.2. |
2. | Tangible common equity (“TCE”), return on tangible common equity (“ROTCE”) and tangible book value per share (“TBVPS”), are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than mortgage servicing rights ("MSRs")), net of related deferred tax liabilities. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE, and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm’s use of equity. The following tables provide reconciliations and calculations of these measures for the periods presented. |
Average | |||||||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||||
(in millions, except per share and ratio data) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||
Common stockholders’ equity | $ | 129,116 | $ | 145,903 | $ | 161,520 | $ | 173,266 | $ | 184,352 | $ | 196,409 | $ | 207,400 | $ | 215,690 | $ | 224,631 | |||||||||
Less: Goodwill | 46,068 | 48,254 | 48,618 | 48,632 | 48,176 | 48,102 | 48,029 | 47,445 | 47,310 | ||||||||||||||||||
Less: Certain identifiable intangible assets | 5,779 | 5,095 | 4,178 | 3,632 | 2,833 | 1,950 | 1,378 | 1,092 | 922 | ||||||||||||||||||
Add: Deferred tax liabilities(a) | 2,369 | 2,547 | 2,587 | 2,635 | 2,754 | 2,885 | 2,950 | 2,964 | 3,212 | ||||||||||||||||||
Tangible common equity | $ | 79,638 | $ | 95,101 | $ | 111,311 | $ | 123,637 | $ | 136,097 | $ | 149,242 | $ | 160,943 | $ | 170,117 | $ | 179,611 | |||||||||
Net income applicable to common equity | $ | 4,931 | $ | 9,289 | $ | 16,728 | $ | 18,327 | $ | 20,606 | $ | 17,081 | $ | 20,620 | $ | 22,927 | $ | 23,086 | |||||||||
Return on equity(b) | 4 | % | 6 | % | 10 | % | 11 | % | 11 | % | 9 | % | 10 | % | 11 | % | 10 | % | |||||||||
Return on tangible common equity(c) | 6 | 10 | 15 | 15 | 15 | 11 | 13 | 13 | 13 |
Period-end | |||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||
(in millions, except per share data) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||
Common stockholders’ equity | $ | 134,945 | $ | 157,213 | $ | 168,067 | $ | 175,514 | $ | 194,727 | $ | 199,699 | $ | 211,664 | $ | 221,505 | $ | 228,122 | |||||||||
Less: Goodwill | 48,027 | 48,357 | 48,854 | 48,188 | 48,175 | 48,081 | 47,647 | 47,325 | 47,288 | ||||||||||||||||||
Less: Certain identifiable intangible assets | 5,581 | 4,621 | 4,039 | 3,207 | 2,235 | 1,618 | 1,192 | 1,015 | 862 | ||||||||||||||||||
Add: Deferred tax liabilities(a) | 2,717 | 2,538 | 2,586 | 2,729 | 2,803 | 2,953 | 2,853 | 3,148 | 3,230 | ||||||||||||||||||
Tangible common equity | $ | 84,054 | $ | 106,773 | $ | 117,760 | $ | 126,848 | $ | 147,120 | $ | 152,953 | $ | 165,678 | $ | 176,313 | $ | 183,202 | |||||||||
Common shares | 3,732.8 | 3,942.0 | 3,910.3 | 3,772.7 | 3,804.0 | 3,756.1 | 3,714.8 | 3,663.5 | 3,561.2 | ||||||||||||||||||
Book value per share(d) | $ | 36.15 | $ | 39.88 | $ | 42.98 | $ | 46.52 | $ | 51.19 | $ | 53.17 | $ | 56.98 | $ | 60.46 | $ | 64.06 | |||||||||
Tangible book value per share(e) | 22.52 | 27.09 | 30.12 | 33.62 | 38.68 | 40.72 | 44.60 | 48.13 | 51.44 |
(a) | Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE. |
(b) | Represents net income applicable to common equity / average common stockholders’ equity. |
(c) | Represents net income applicable to common equity / average tangible common equity. |
(d) | Represents common stockholders’ equity at period-end / common shares at period-end. |
(e) | Represents tangible common equity at period-end / common shares at period-end. |
1. | Common equity Tier 1 (“CET1”) capital and the CET1 capital ratios under the Basel III Fully Phased-In capital rules, to which the Firm will be subject commencing January 1, 2019, are considered key regulatory capital measures. These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm’s capital position. For additional information on these measures, see Capital Risk Management on pages 76-85 of the 2016 Form 10-K. |
2. | Core loans are also considered a key performance measure. Core loans represent loans considered central to the Firm’s ongoing businesses; and exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. Core loans are utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio. |
102 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 103 |
104 • JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT |
JPMORGAN CHASE & CO. • 2017 PROXY STATEMENT • 105 |
© 2017 JPMorgan Chase & Co. All rights reserved. | ![]() | ||
Printed in U.S.A. on paper that contains recycled fiber with soy ink. |
![]() COMPUTERSHARE P.O. Box 30170 College Station, TX 77842-3170 | ![]() | |
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||
If you would like to reduce the costs incurred by JPMorgan Chase & Co. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions below to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||
VOTE BY INTERNET — www.proxyvote.com or scan the QR code above | ||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||
VOTE BY PHONE — 1-800-690-6903 | ||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. | ||
VOTE BY MAIL | ||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to JPMorgan Chase & Co., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | Your voting instructions are confidential. | |
E19087-P87837 KEEP THIS PORTION FOR YOUR RECORDS | ||
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY |
JPMORGAN CHASE & CO. | ||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | The Board of Directors recommends you vote FOR the following proposal: | |||||||||||||||||||||||
1. | Election of Directors | For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
1a. Linda B. Bammann | o | o | o | 3. | Ratification of independent registered public accounting firm | o | o | o | ||||||||||||||||
1b. James A. Bell | o | o | o | The Board of Directors recommends you vote 1 Year on the following proposal: | ||||||||||||||||||||
1c. Crandall C. Bowles | o | o | o | 4. | Advisory vote on frequency of advisory resolution to approve executive compensation | 1 Year o | 2 Years o | 3 Years o | Abstain o | |||||||||||||||
1d. Stephen B. Burke | o | o | o | |||||||||||||||||||||
1e. Todd A. Combs | o | o | o | The Board of Directors recommends you vote AGAINST the following shareholder proposals: | ||||||||||||||||||||
1f. James S. Crown | o | o | o | For | Against | Abstain | ||||||||||||||||||
1g. James Dimon | o | o | o | 5. | Independent board chairman | o | o | o | ||||||||||||||||
1h. Timothy P. Flynn | o | o | o | |||||||||||||||||||||
1i. Laban P. Jackson Jr. | o | o | o | 6. | Vesting for government service | o | o | o | ||||||||||||||||
1j. Michael A. Neal | o | o | o | |||||||||||||||||||||
1k. Lee R. Raymond | o | o | o | 7. | Clawback amendment | o | o | o | ||||||||||||||||
1l. William C. Weldon | o | o | o | |||||||||||||||||||||
2. | Advisory resolution to approve executive compensation | o | o | o | 8. | Gender pay equity | o | o | o | |||||||||||||||
9. | How votes are counted | o | o | o | ||||||||||||||||||||
10. | Special shareowner meetings | o | o | o | ||||||||||||||||||||
Please indicate if you plan to attend this meeting. | o | o | ||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
E19088-P87837 |
JPMORGAN CHASE & CO. This proxy is solicited from you by the Board of Directors for use at the Annual Meeting of Shareholders of JPMorgan Chase & Co. on May 16, 2017. You, the undersigned shareholder, appoint each of Molly Carpenter and Marianne Lake, your attorney-in-fact and proxy, with full power of substitution, to vote on your behalf shares of JPMorgan Chase common stock that you would be entitled to vote at the 2017 Annual Meeting, and any adjournment of the meeting, with all powers that you would have if you were personally present at the meeting. The shares represented by this proxy will be voted as instructed by you on the reverse side of this card with respect to the proposals set forth in the proxy statement, and in the discretion of the proxies on all other matters which may properly come before the 2017 Annual Meeting and any adjournment thereof. If the card is signed but no instructions are given, shares will be voted in accordance with the recommendations of the Board of Directors. Participants in the 401(k) Savings Plan: If you have an interest in JPMorgan Chase common stock through an investment in the JPMorgan Chase Common Stock Fund within the 401(k) Savings Plan, your vote will provide voting instructions to the trustee of the plan to vote the proportionate interest as of the record date. If no instructions are given, the trustee will vote unvoted shares in the same proportion as voted shares. Voting Methods: If you wish to vote by mail, please sign your name exactly as it appears on this proxy and mark, date and return it in the enclosed envelope. If you wish to vote by Internet or telephone, please follow the instructions on the reverse side. Continued and to be signed on reverse side |
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