Several directors who reviewed federal orders that JPMorgan Chase (JPM) fix its risk management have supervised the New York financial services firm's CEO Jamie Dimon for many years. They also earned as much compensation in exchange for their services as some bank employees do.
The U.S. Federal Reserve Board and Office of the Comptroller of the Currency issued cease and desist orders on January 14, noting the need to make improvements in areas such as anti-money laundering compliance. The development follows Mr. Dimon's disclosure to the media that his company made a "terrible, egregious" trading mistake that cost $2 billion. JPMorgan said on January 16 that the board approved compensating Mr. Dimon $11.5 million for his work in 2012, or around half as much as in the prior year. The board took into consideration both the continued strong performance of JPMorgan as well as the chief investment office's recent losses, including Mr. Dimon's responsibility as CEO.
Most of the people tasked with holding Mr. Dimon accountable for his mistakes have known him for years. The chair of JPMorgan's risk policy committee, James S. Crown, is among those most familiar with the firm. From 1991 to 2004, the president of the investment firm Henry Crown & Co. was a director at Bank One Corp., where Mr. Dimon had been CEO starting in March 2000 until the Chicago bank merged with JPMorgan in July 2004. Mr. Crown has remained a director at JPMorgan since then.
Laban P. Jackson, the CEO of the real estate development firm Clear Creek Properties, Inc., also came over to JPMorgan in 2004 after having served as a director at Bank One starting in 1993. He's the audit committee chair.
And Lee R. Raymond, the retired CEO of the oil and gas company Exxon Mobil Corp., has been a director at JPMorgan since 2001 after an earlier stint between 1987 and 2000. He's the chair of JPMorgan's compensation, management & development committee as well as a member of the corporate governance & nominating committee.
Another familiar face is Ellen Futter, the president and trustee of the American Museum of Natural History. She has been a director on JPMorgan's board since 2001 after an earlier stint between 1997 and 2000, according to the company's most recent proxy filing. She is a member on both the bank's public responsibility and the risk policy committees.
In 2011, each non-management director at JPMorgan received an annual cash retainer of $75,000 and an annual grant, made when annual employee incentive compensation was paid, of deferred stock units valued at $170,000 on the date of grant. The board said it "believes it is desirable" that a significant portion of director compensation be linked to the firm's stock.
JPMorgan also said in its proxy filing that its board has reviewed the relationships between the firm and each director, and determined that each has "only immaterial relationships" and accordingly each is an independent director under New York Stock Exchange corporate governance listing standards.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.