With over $2 trillion in assets, J.P. Morgan Chase & Co. is one of America’s top banks. This article discusses how CEO and chairman Jamie Dimon’s announcement of his throat cancer diagnosis had board members scrambling succession plan for the company, and what this means for the company’s stock value.
James Dimon recently said he plans to remain chairman and chief executive of J.P. Morgan ChaseJPM +0.46% & Co. for an additional five years. But his disclosure Tuesday that he will undergo cancer treatment is raising questions over who is ready to fill in or succeed him and how the largest U.S. bank by assets will handle a sensitive health issue for its most visible employee.
According to Mr. Dimon’s memo to employees, the prognosis for his throat cancer is “excellent” and the illness is “curable.”
Still, the health problem has rekindled interest in the company’s succession plan.
“He’s iconic and it’s going to be delicate,” said bank analyst Nancy Bush of NAB Research LLC. J.P. Morgan will want to make sure people know he “has his pulse on the company [but also] allow him time to heal,” she said.
The biggest question in the short term is the extent to which Mr. Dimon will have to pull back from regular duties while undergoing eight weeks of treatment.
“When you hear the ‘C word,’ everyone freezes,” said Deborah J. Cornwall, managing director at Corlund Group LLC, a leadership and governance consultancy. “The CEO and the board and the corporation are far better served by full disclosure than by playing ostrich and pretending it will go away—because it may or may not.”
So far, she said, J.P. Morgan has handled the situation well. Over the next several weeks the board should be clear whether the treatment will lead to business as usual or a leave of absence resulting in a change in assignment, Ms. Cornwall said.
J.P. Morgan retail head Gordon Smith and asset-management chief Mary Callahan Erdoes are two of the top candidates to take on bigger roles if an immediate change in leadership is necessary, a person familiar with the bank’s plans said.
Asset management and the consumer- and community-banking units in 2013 enjoyed the largest return on equity—both at 23%—of any of the bank’s units, according to Mr. Dimon’s most recent shareholder letter. That compares with 11% at the overall bank, 15% at the corporate and investment bank and 19% at the commercial bank in 2013, according to the letter.
Mr. Smith, 55 years old, joined from American Express Co. in 2007. He made a name for himself by shifting Chase’s card strategy to target more affluent consumers and boosting its rewards program to let customers redeem points for “experiences.”
The unit’s net income was $10.7 billion in 2013, up from $10.6 billion in 2012, and average total deposits are up 10% from a year ago, the company said.
Ms. Erdoes, 46, also is attracting more attention with her success running J.P. Morgan’s asset-management unit, which generated $11.3 billion in revenue and $2 billion in net income in 2013, up 14% and 19%, respectively, from 2012, according to the company.
Ms. Erdoes joined J.P. Morgan in 1996 from Bankers Trust Corp. She has daily 8 a.m. meetings for asset management, people familiar with the meetings said. Everyone in the unit—from interns up—is invited to join the roughly 30-minute discussions, these people said.
Longer-term succession candidates include Chief Operating Officer Matt Zames ; Doug Petno, chief of the commercial bank; Daniel Pinto, chief of the corporate and investment bank; Marianne Lake, chief financial officer; and Ashley Bacon, chief risk officer, a person familiar with the succession plan said.
David Ellison, who manages a portfolio at Hennessy Funds that holds J.P. Morgan shares, said he isn’t concerned about the company’s long-term planning.
“In an organization as large and as complex and as managed as it is, I’m not that worried about succession,” said Mr. Ellison, who is based in Boston. “He’s grooming four or five people, and that will work out just fine.”
J.P. Morgan shares fell 60 cents, or 1%, to $56.97 in 4 p.m. New York Stock Exchange composite trading.
Robert Benmosche, head of American International Group Inc., AIG -0.56% continued to turn around the troubled insurer after he developed cancer in 2010. AIG board members decided Chairman Robert S. “Steve” Miller would take the helm temporarily if Mr. Benmosche couldn’t perform his job. In a February 2011 CNBC interview Mr. Benmosche said the cancer had been eliminated with chemotherapy.
“In these situations, as a CEO, it’s vital to work closely and stay in close contact with the board of directors and shareholders,” Mr. Benmosche said in a statement to The Wall Street Journal on Wednesday.
Mr. Dimon’s disclosure also rekindled a debate over J.P. Morgan’s corporate governance. Mr. Dimon has held the title of chairman and chief executive since 2006. After J.P. Morgan posted a $6 billion trading loss in 2012, some shareholders argued that the roles should be split and proposed a measure to that effect during the 2013 shareholder meeting.
The proposal was soundly defeated, but Mr. Dimon’s current health situation, which likely will force him to reduce his workload this summer, raises the question of whether such a big bank should place so much authority in one person.
“Given the financial crisis and best practices for corporate governance, it’s remarkable that a bank of the size and systemic importance of J.P. Morgan finds itself in a position of having one man as both chairman and CEO,” wrote Janet Tavakoli, president of Tavakoli Structured Finance Inc., in a Wednesday note to clients. “Jamie Dimon’s recent news highlights the risk in that folly.”
On Monday night, Mr. Dimon spoke at a retirement party for a longtime employee and seemed to be in good health and high spirits, people who attended the event said.
Mr. Dimon discovered he had throat cancer within the last few weeks after seeing a doctor because he didn’t feel well, said a person close to the executive.
As he got more reliable medical information over the past week, Mr. Dimon called J.P. Morgan’s lead board director Lee Raymond and a few other directors, people close to Mr. Dimon said. Mr. Raymond, former Exxon Mobil Corp. chairman and CEO, and the other directors then connected with other board members.
Mr. Dimon began J.P. Morgan’s weekly operating committee meeting Monday morning by telling fellow top executives of his diagnosis, stunning his audience, people familiar with the meeting said. Mr. Dimon was stoic, these people said, adding that the bank’s executives are planning to take things step by step.
For over 15 years, Elizabeth Lesar has been nurturing relationships between investment firms and investors to generate optimal revenues via proprietary trading styles focusing on equities, fixed income, and alternative securities. To keep posted on updates about Ms. Lesar and her latest financial endeavors, subscribe to this Facebook page.
With over $2 trillion in assets, J.P. Morgan Chase & Co. is one of America’s top banks. This article discusses how CEO and chairman Jamie Dimon’s announcement of his throat cancer diagnosis had board members scrambling succession plan for the company, and what this means for the company’s stock value.
James Dimon recently said he plans to remain chairman and chief executive of J.P. Morgan ChaseJPM -0.67% & Co. for an additional five years. But his disclosure Tuesday that he will undergo cancer treatment is raising questions over who is ready to fill in or succeed him and how the largest U.S. bank by assets will handle a sensitive health issue for its most visible employee.
According to Mr. Dimon’s memo to employees, the prognosis for his throat cancer is “excellent” and the illness is “curable.”
Still, the health problem has rekindled interest in the company’s succession plan.
“He’s iconic and it’s going to be delicate,” said bank analyst Nancy Bush of NAB Research LLC. J.P. Morgan will want to make sure people know he “has his pulse on the company [but also] allow him time to heal,” she said.
The biggest question in the short term is the extent to which Mr. Dimon will have to pull back from regular duties while undergoing eight weeks of treatment.
“When you hear the ‘C word,’ everyone freezes,” said Deborah J. Cornwall, managing director at Corlund Group LLC, a leadership and governance consultancy. “The CEO and the board and the corporation are far better served by full disclosure than by playing ostrich and pretending it will go away—because it may or may not.”
So far, she said, J.P. Morgan has handled the situation well. Over the next several weeks the board should be clear whether the treatment will lead to business as usual or a leave of absence resulting in a change in assignment, Ms. Cornwall said.
J.P. Morgan retail head Gordon Smith and asset-management chief Mary Callahan Erdoes are two of the top candidates to take on bigger roles if an immediate change in leadership is necessary, a person familiar with the bank’s plans said.
Asset management and the consumer- and community-banking units in 2013 enjoyed the largest return on equity—both at 23%—of any of the bank’s units, according to Mr. Dimon’s most recent shareholder letter. That compares with 11% at the overall bank, 15% at the corporate and investment bank and 19% at the commercial bank in 2013, according to the letter.
Mr. Smith, 55 years old, joined from American Express Co. in 2007. He made a name for himself by shifting Chase’s card strategy to target more affluent consumers and boosting its rewards program to let customers redeem points for “experiences.”
The unit’s net income was $10.7 billion in 2013, up from $10.6 billion in 2012, and average total deposits are up 10% from a year ago, the company said.
Ms. Erdoes, 46, also is attracting more attention with her success running J.P. Morgan’s asset-management unit, which generated $11.3 billion in revenue and $2 billion in net income in 2013, up 14% and 19%, respectively, from 2012, according to the company.
Ms. Erdoes joined J.P. Morgan in 1996 from Bankers Trust Corp. She has daily 8 a.m. meetings for asset management, people familiar with the meetings said. Everyone in the unit—from interns up—is invited to join the roughly 30-minute discussions, these people said.
Longer-term succession candidates include Chief Operating Officer Matt Zames ; Doug Petno, chief of the commercial bank; Daniel Pinto, chief of the corporate and investment bank; Marianne Lake, chief financial officer; and Ashley Bacon, chief risk officer, a person familiar with the succession plan said.
David Ellison, who manages a portfolio at Hennessy Funds that holds J.P. Morgan shares, said he isn’t concerned about the company’s long-term planning.
“In an organization as large and as complex and as managed as it is, I’m not that worried about succession,” said Mr. Ellison, who is based in Boston. “He’s grooming four or five people, and that will work out just fine.”
J.P. Morgan shares fell 60 cents, or 1%, to $56.97 in 4 p.m. New York Stock Exchange composite trading.
Robert Benmosche, head of American International Group Inc., AIG -0.59% continued to turn around the troubled insurer after he developed cancer in 2010. AIG board members decided Chairman Robert S. “Steve” Miller would take the helm temporarily if Mr. Benmosche couldn’t perform his job. In a February 2011 CNBC interview Mr. Benmosche said the cancer had been eliminated with chemotherapy.
“In these situations, as a CEO, it’s vital to work closely and stay in close contact with the board of directors and shareholders,” Mr. Benmosche said in a statement to The Wall Street Journal on Wednesday.
Mr. Dimon’s disclosure also rekindled a debate over J.P. Morgan’s corporate governance. Mr. Dimon has held the title of chairman and chief executive since 2006. After J.P. Morgan posted a $6 billion trading loss in 2012, some shareholders argued that the roles should be split and proposed a measure to that effect during the 2013 shareholder meeting.
The proposal was soundly defeated, but Mr. Dimon’s current health situation, which likely will force him to reduce his workload this summer, raises the question of whether such a big bank should place so much authority in one person.
“Given the financial crisis and best practices for corporate governance, it’s remarkable that a bank of the size and systemic importance of J.P. Morgan finds itself in a position of having one man as both chairman and CEO,” wrote Janet Tavakoli, president of Tavakoli Structured Finance Inc., in a Wednesday note to clients. “Jamie Dimon’s recent news highlights the risk in that folly.”
On Monday night, Mr. Dimon spoke at a retirement party for a longtime employee and seemed to be in good health and high spirits, people who attended the event said.
Mr. Dimon discovered he had throat cancer within the last few weeks after seeing a doctor because he didn’t feel well, said a person close to the executive.
As he got more reliable medical information over the past week, Mr. Dimon called J.P. Morgan’s lead board director Lee Raymond and a few other directors, people close to Mr. Dimon said. Mr. Raymond, former Exxon Mobil Corp. chairman and CEO, and the other directors then connected with other board members.
Mr. Dimon began J.P. Morgan’s weekly operating committee meeting Monday morning by telling fellow top executives of his diagnosis, stunning his audience, people familiar with the meeting said. Mr. Dimon was stoic, these people said, adding that the bank’s executives are planning to take things step by step.
For over 15 years, Elizabeth Lesar has been nurturing relationships between investment firms and investors to generate optimal revenues via proprietary trading styles focusing on equities, fixed income, and alternative securities. To keep posted on updates about Ms. Lesar and her latest financial endeavors, subscribe to this Facebook page.
With Neymar out injured, just about everyone in Brazil knew it would be tough against Germany. Nobody ever expected this. The Germans tore apart Brazil’s porous defense time and time again Tuesday, routing the hosts 7-1 in the World Cup semifinals, the largest margin of defeat at this stage in the history of the tournament. The astounding scoreline is sure to overshadow Miroslav Klose’s record-setting 16th career World Cup goal. The strike pushed Klose past Brazil great Ronaldo, who was at the Mineirao Stadium on Tuesday as the Germans advanced to their eighth World Cup final. Germany will face either Argentina or the Netherlands on Sunday at the Maracana Stadium in Rio de Janeiro with a chance to win for the fourth time.
After a prolonged slump, the U.S. job market is beginning to pick up. This article talks about how companies have been beefing up their staffing and payrolls to spur consumer spending, with the Dow rising to a record high of 17,000 following reports on the unemployment rate dropping to just 3.1 million.
Job growth blew past expectations and the unemployment rate fell to the lowest level since before the financial crisis peaked six years ago, creating a firm foundation for a stronger U.S. economic expansion.
Payrolls rose by 288,000 workers following a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed today in Washington. The 1.39 million increase in employment over the past six months is the biggest over a similar period since early 2006.
Companies such as Ford Motor Co. (F)are adding staff and boosting output to meet improving sales, which in turn will lead to gains in incomes that will spur even more demand. The yield on Treasury securities climbed as the jobs report called into question how much longer Federal Reserve policy makers can keep their benchmark interest rate near zero to nurture the economy.
“We’re seeing a self-sustaining recovery where production growth leads to job growth, which leads to consumption growth,” said Robert Stein, deputy chief economist at First Trust Portfolios LP in Wheaton, Illinois, and the top forecaster of payrolls the past two years, according to data compiled by Bloomberg. “With the unemployment rate coming down, the Fed is in a bit of a bind.”
The Dow Jones Industrial Average climbed above 17,000 for the first time on the improving labor market as Treasury securities dropped. The Standard & Poor’s 500 index rose 0.5 percent to 1,985.44 at the close in New York, and the yield on the benchmark 10-year note increased to 2.64 percent at 1:24 p.m. from 2.63 percent late yesterday.
Fed’s Projection
The decrease to 6.1 percent from May’s 6.3 percent put the jobless rate at the lowest level since September 2008. Fed policy makers had projected in their meeting last month that it wouldn’t get that low until the end of the year.
The gains in hiring and drop in joblessness prompted economists at banks such as JPMorgan Chase & Co. to push forward their estimate for when the central bank will raise the benchmark interest rate for the first time since 2006.
The median forecast in a Bloomberg survey of 94 economists called for a 215,000 advance in payrolls. Estimates ranged from gains of 145,000 to 290,000 after a previously reported 217,000 advance. The unemployment rate, which is derived from a separate Labor Department survey of households, was projected to hold at 6.3 percent, according to the survey median.
The need to fill openings prompted employers to give those out of work for the longest time a serious look. The number of Americans unemployed for 27 weeks or more fell to 3.1 million, the fewest since February 2009.
Factories took on the most workers in four months, while payrolls at private service providers climbed by the most since October 2012. An index gauging the breadth of private-industry hiring in June climbed to 64.8 from 62.9 a month earlier.
“The labor market is literally exploding,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “It’s a full-on expansion. The economy is creating millions of jobs.”
Another report today showed service providers including construction firms and retailers expanded in June at the second-fastest pace in almost a year, indicating more momentum in the economy. The Institute for Supply Management’s non-manufacturing index eased to 56 in June from May’s 56.3, which was the highest since August, according to the Tempe, Arizona-based group.
Separate figures from the Labor Department today showed little change in the number of Americans filing applications for unemployment benefits last week, a sign that employers are limiting dismissals. Fewer firings typically foreshadow an acceleration of job growth.
Trade Gap
Figures from the Commerce Department showed the U.S. trade deficit narrowed 5.6 percent in May to $44.4 billion, helped by record exports. The value of petroleum imports was the smallest since November 2010.
Today’s payrolls report showed that private employment, which excludes government agencies, rose by 262,000 in June after a 224,000 gain the prior month.
Paige Sims, 33, said a networking event helped her get hired as a product safety engineer at General Electric Co. She started work on June 30 after searching for about four months.
“It was a little easier” to find employment given her work experience of almost 10 years and her location in Greenville, South Carolina, a growing, highly industrial city with many large manufacturing facilities, she said.
Finding Work
“The labor market is growing for technical people like engineers and scientists, and may be a little more sluggish for those who’re in other fields,” said Sims.
At Dearborn, Michigan-based Ford, hiring is so strong that the automaker predicts it may beat a 2011 plan to bring on 12,000 new workers by 2015.
That’s because of stronger demand for automobiles. Cars and light trucks sold at a 16.9 millionpace in June, the strongest since July 2006, after a 16.7 million rate in May, based on data from Ward’s Automotive Group. Deliveries at General Motors Co. and Ford, the two largest U.S. automakers, exceeded analysts’ estimates.
Recent strides in the labor market underscore the economy’s snapback from a first-quarter contraction. The economy shrank at a 2.9 percent annualized rate from January through March, the biggest drop-off since the first quarter of 2009, the Commerce Department reported last month. Consumer purchases grew at the weakest pace in five years.
Growth Outlook
Gross domestic product probably bounced back in the second quarter and will expand at an average 3.1 percent rate in the remaining two quarters of 2014, according to the median forecast in a Bloomberg survey conducted June 6 to June 11. Household purchases are also expected to improve, it showed.
Recent data are consistent with the outlook. Factories, propelled by the strongest orders of the year, sustained gains in June and are poised to be part of the rebound, the Institute for Supply Management’s manufacturing report showed this week.
Today’s Labor Department’s payrolls report also showed factory hiring increased by 16,000 in June. Employment at private service-providers jumped 236,000. Retailers took on 40,200 employees.
Average hourly earnings rose by 0.2 percent for a second month, to $24.45 in June from the prior month, and increased 2 percent over the past 12 months.
Fed Chair Janet Yellen said last month that she expects consumer spending will continue to grow at a “healthy rate,” in part as bigger income gains materialize.
“My own expectation is that as the labor market begins to tighten, we will see wage growth pick up some,” Yellen told reporters on June 18 after the Fed’s policy meeting. “If we were to fail to see that, frankly I would worry about downside risk to consumer spending.”
Yellen’s dashboard of job market progress spans nine measures, including payrolls, the jobless rate, underemployment, labor force participation, and the share of long-term unemployed workers. It also monitors the job openings rate, layoffs and discharges, the hires rate, and the quits rate.
Elizabeth Lesar nurtures relationships between investment firms and investors, maximizing revenue by focusing on equities, alternative investments, and fixed income. For more discussions on finance and investing, subscribe to this blog.
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