Jamie Dimon, Katie Porter, and "Family First"
Jamie Dimon became CEO of JP Morgan in 2004 after orchestrating the sale of Bank One as its CEO. Similar to his turnaround of Bank One, Dimon is well-known for building JP Morgan into a powerhouse that weathered the storm of the Wall Street Crisis of 2008, despite the downfall of its peers. He is known as "the only chief of a major bank to have properly prepared for the hundred-year storm that hit Wall Street" (2) by reducing its exposure to mortgages.
Dimon has maintained over the years that family comes first. He says he loves his job, but that is family is close and he depends on them in difficult times.
However, Dimon was cast in a negative light at Congressional hearings in April 2019, where House Representative Katie Porter (D-Calif.). Porter asked Dimon, "How should a woman who lived in her district manage the fact that her job with Dimon’s company didn’t pay enough to cover her bills? With a take-home pay of $35,070 a year, including a $750 bonus, the employee came up nearly $600 short a month on her expenses, even excluding costs such as clothes and medication" (3).
Dimon said that he needed think about it.
As of 2018, Dimon has a $31 million salary (base + bonuses). In 1965, the average CEO made 20 times the average worker, while the ratio in 2018 was 271 times the average worker salary of $58,000 (Economic Policy Institute).
JP Morgan reported posted earnings 67% higher in the last quarter of 2018 versus the same time in 2017. One could argue that his performance helps keep the more than 250,000 employees secure.
Back to the 'family first' comments: Dimon has a convincing case, given that he is known for family friendly programs at JP Morgan such as childcare benefits and 16 weeks of parent leave. He states in (1): "You’ve got to take care of your friends, your family, your spirit, your mind, your body, your soul...Otherwise you won’t have a fulfilling life, and those are important.” He talks about the closeness of his family, such as his mother sending him notes after every interview she sees (she has since passed away).
What does Dimon say about his 'out of touch' comments regarding Rep. Porter's questions regarding a typical worker at JP Morgan? She cited an employee who made $16.50 an hour ($35,000 annually). 2019 statistics indicate, however, that average JP Morgan Chase & Co. yearly salary is $82,501, ranging from $46,569 to $145,266 (JPMCC) (6). Nevertheless, Dimon's questioning of the accuracy of Porter's numbers and comment that the woman "could have my job someday" did not impress.
Topics
Equity Theory, Ethics, CEO Pay, Emotional Intelligence, Leadership
Student Discussion/Assignments
Equity theory. The CEO is not a 'comparison other', so who are the CEO's peers and should employees be able to set their comparison other perceptions akin to the same level of corporation's peers? For example, the CEO at JP Morgan is paid similarly to others at competitors (although Dimon is among the highest paid in the world). So, employees would set their equity perceptions based on those companies' salaries at their same level? Would this be a decent strategy to employ at JP Morgan if their employee salaries are slightly above the peers'? Or it could be dangerous if not...
Emotional Intelligence. Dimon appears to have a healthy EQ when it comes to relating to something that all employees have in common - family priorities, whatever those may consist of for the individual. He walks the talk, apparently, with policies. Yet, his empathy seems to be lacking - he can't relate to the single mother example given by Rep. Porter. This is similar, although less egregious perhaps, as the U.S. Commerce Secretary Wilbur Ross stating the government employees not working during the government shut down should get a loan (adding that "we’ve seen a number of ads from the financial institutions doing that") (8). In sum, empathy is more than offering suggestions and those at the top of the organization may suffer consequences when employees find them out of touch, seemingly unfeeling, and not even trying to relate.
CEO pay is a current topic that can spark discussion of ethical treatment of employees, money that may be spent elsewhere, and performance of those at the bottom (and whether it is rewarded).
Students may not know the 'sweet deals' (golden parachutes) many CEOs have when they leave the company, even for poor performance.
Equity theory fits here, as does organizational justice, simply in the question of 'is it fair'? To be specific, would informational justice be in order, to inform employees of the salaries? Even though salaries can be found for public company executives at the SEC 'Edgar' site (https://www.sec.gov/oiea/Article/edgarguide.html).
Sources
https://www.cnbc.com/2018/05/22/jpmorgan-ceo-jamie-dimon-prioritizes-his-job-literally-last.html
https://www.newsweek.com/jamie-dimon-americas-most-important-banker-79437
https://www.washingtonpost.com/politics/2019/04/12/one-exchange-during-congressional-hearing-laid-bare-ceo-employee-pay-disparity/?utm_term=.5d3e6c2abff1
https://www.cnbc.com/2018/01/22/heres-how-much-ceo-pay-has-increased-compared-to-yours-over-the-years.html
https://www.cnn.com/2019/01/17/business/jamie-dimon-jp-morgan-salary-compensation/index.html
https://www.payscale.com/research/US/Employer=J.P._Morgan_Chase_%26_Co._(JPMCC)/Salary
https://www.cnbc.com/2019/01/24/commerce-secretary-ross-says-unpaid-federal-workers-should-just-get-a-loan.html