2024 Proxy Supplement
April 2024
Executive Summary
A Executive
Compensation
Board
Composition &
B Executive
Succession
Planning
C | Human Rights |
D | Other Proposals |
- We recommend voting FOR management proposals on executive compensation and the amended and restated long-term incentive plan
- We recommend voting AGAINST the excessive golden parachute shareholder proposal because the key terms of the proposal are not compatible with the Firm's compensation program. The Firm does not provide golden parachute agreements and there are no employment agreements
- We recommend voting FOR all Board Director nominees
- We recommend voting AGAINST the Independent Chair shareholder proposal because the Board believes its discretion is critical to fulfilling its fiduciary duties and that its general policy on separating the Chair and CEO roles upon the next CEO transition best serves the Firm and its shareholders
- The Firm's continued strong financial performance and meaningful progress on key initiatives demonstrates that the current structure has worked over the long term and the proponent has provided no contrary empirical evidence to support their preferred structure
- We recommend voting AGAINST the Indigenous Peoples' rights indicators shareholder proposal because the proponent has failed to provide any credible evidence of the ineffectiveness of our risk-based approach to environmental & social ("E&S") issues
- We recommend voting AGAINST the report on due diligence in conflict-affected and high-risk area ("CAHRA") shareholder proposal because the proponent has not evidenced the need for or potential benefit of the requested report
- We have firmwide policies and standards related to human rights already in place, including an escalation and due diligence process conducted by E&S subject matter experts
- We recommend voting FOR the ratification of the auditor as the Firm's independent registered public accounting firm
- We recommend voting AGAINST all other shareholder proposals as they do not explain how they advance the long-term financial interests of the Firm's shareholders
- Some proposals suggest a solution without identifying a problem and some provide no empirical evidence of financial effectiveness
2
Executive Summary
We execute a robust, ongoing shareholder engagement program to gather valuable feedback to share with senior management and our Board
Ongoing discussions with shareholders to consider their perspectives on our practices
- In 2023, we solicited feedback through approximately 200 engagements with 120 shareholders that represented 50% of the Firm's outstanding common stock
- Our engagements with shareholders focused on Board and management succession planning, executive compensation, technology, including artificial intelligence, and cybersecurity
- We also discussed the Firm's sustainability efforts, including its climate strategy, in addition to a variety of discussions on the Firm's strategy and its financial and operating performance
ENGAGEMENT METRICS (% CUMULATIVE COMMON SHARES OUTSTANDING)
Institutional investors1 in | Outreach to shareholders2 | Engagement with shareholders2 | Lead Independent Director |
shareholder base | participation in engagements2 |
~74% | ~67% | ~50% | ~25% |
For additional information and endnotes, please see slide 18
3
Executive Summary
We recommend shareholders vote FORmanagement proposals and AGAINSTshareholder proposals at the 2024 Annual Meeting
Proposal | Proposal title | Management | Reason | ||
number | recommendation | ||||
1 | Election of directors | FOR | The Board nominees possess the skills, experience, personal attributes and tenure needed to guide the Firm's strategy, | ||
and to effectively oversee the Firm's risk management and internal control frameworks, and management's execution of | |||||
its responsibilities | |||||
2 | Advisory resolution to approve | FOR | For 2023 pay decisions, the Compensation & Management Development ("CMDC") recognized the Firm's continued focus | ||
executive compensation | on serving our clients and customers around the world amid ongoing, growing geopolitical tensions, economic uncertainty, | ||||
elevated inflation and higher rates, while investing in and executing on long-term strategic initiatives | |||||
3 | Approval of amended and restated | FOR | We believe that voting in favor of the long-term incentive plan is important, as a well-designed equity program serves to | ||
long-term incentive plan effective | strengthen the alignment of employees' long-term economic interests with those of shareholders while not causing | ||||
May 21, 2024 | unreasonable dilution to shareholders | ||||
4 | Ratification of independent | FOR | The members of the Audit Committee and the Board believe that continued retention of the auditor as the Firm's | ||
registered public accounting firm | independent external auditor is in the best interests of JPMorgan Chase and its shareholders | ||||
5 | Independent board chairman | AGAINST | The proposal's requested policy is adverse to the interests of the Firm's shareholders because it restricts the Board's | ||
ability to use its experience, judgment, boardroom insight and ongoing shareholder feedback to make the best-informed | |||||
decision on its leadership structure based on current facts and circumstances | |||||
6 | Humanitarian risks due to climate | AGAINST | We do not agree with the implied premise that progress on business-driven climate objectives hinders progress on | ||
change policies | sustainable development, or vice versa. The Firm's decisions are made based on facts, business principles and long-term | ||||
shareholder value, not social or political agendas | |||||
7 | Indigenous Peoples' rights indicators | AGAINST | The Proponent makes inaccurate assertions about the Firm's financing activities and cites subjective determinations by | ||
sources that are not necessarily aligned with or knowledgeable about our shareholders' long-term financial interests. The | |||||
Firm has adopted and implemented appropriate policies and practices that address the concerns raised by the proponent | |||||
8 | Proxy voting alignment | AGAINST | J.P. Morgan Asset Management Inc. ("JPMAM") makes its own independent investment and proxy voting decisions, which | ||
are not constrained or dictated by its membership in organizations. To do otherwise would be contrary to JPMAM's | |||||
fiduciary duty to its clients | |||||
9 | Report on due diligence in | AGAINST | The proposal makes broad, unsubstantiated allegations that the Firm has operations and relationships that are implicated | ||
conflict-affected and high-risk areas | in violations of international humanitarian and human rights law, and cites a number of subjective, inaccurate and biased | ||||
determinations by sources that are not necessarily aligned with shareholders' long-term financial interests. The Firm has | |||||
adopted and implemented appropriate policies and practices that address the concerns raised by the proponent | |||||
10 | Shareholder opportunity to vote on | AGAINST | The Firm does not provide golden parachute agreements, including any accelerated cash/equity payments or special | ||
excessive golden parachutes | benefits upon a change in control. There are no employment agreements, and Named Executive Officers ("NEOs") are not | ||||
entitled to special severance benefits | |||||
11 | Report on respecting workforce | AGAINST | There is no evidence of discrimination based on religion or political views. Producing the requested report would divert | ||
civil liberties | resources from the meaningful work the Firm is already doing to create a more diverse and inclusive business and would | ||||
provide no additional information to shareholders | |||||
4 | |||||
- Executive Compensation - Proposal 2: Advisory Resolution To Approve Executive Compensation
For 2023 pay decisions, the CMDC considered the Firm's record results, successful acquisition of First Republic Bank1 and growth across our lines of business
The Board of Directors recommends that shareholders vote FORexecutive compensation (Proposal 2)
Among other metrics, the CMDC considered that the Firm achieved managed revenue2 of $162.4B, which was a record for the sixth consecutive year, as well
as record net income of $49.6B and ROTCE2 of 21%, which is among the highest of our peers
The Board approved the annual compensation for 2023 for Mr. James Dimon, CEO, in the amount of $36M (~4% increase YoY)
- The annual compensation for 2023 reflects Mr. Dimon's continued exemplary leadership of the Firm
- The Firm achieved record results and successfully navigated and supported its clients and customers through the regional bank turmoil and completed the acquisition of First Republic Bank1
JPMORGAN CHASE PRE-TAX INCOME2
Reported Pre-Tax Income ($B) | ||||
Managed Pre-Tax Income ($B) | $69.0 | |||
Pre-Tax Income (ex. LLR) ($B) | ||||
$51.0 | $51.1 | $53.3 | ||
$47.6 |
Our relative CEO pay-for-performance alignment has been consistently strong and more efficient than our primary peers
(as listed below)
3-YEAR AVERAGE ANNUAL CEO PAY AS A % OF PROFITS (2021-2023)3
JPMorgan Chase | ||
0.08% | ||
Bank of America | 0.11% | |
Wells Fargo | 0.14% | |
Citigroup | 0.16% | |
Goldman Sachs | 0.22% | |
Morgan Stanley | 0.29% | |
American Express | 0.40% | |
Updates to the Performance Share Unit ("PSU") Program
For the 2023 PSU awards granted in January 2024, the CMDC maintained the key structure of the design with select updates to address external factors and enhance the rigor of the PSU program:
PSU Peers: Following the acquisition of |
Credit Suisse by UBS (both PSU peer |
companies) in 2023, the CMDC removed |
Credit Suisse from the peer group without |
replacement, resulting in 10 peer |
companies used to evaluate relative |
ROTCE performance for new and |
outstanding awards. Our current PSU |
Peers continue to reflect large financial |
services companies with at least 30% of |
JPMorgan Chase's revenue mix |
PSU relative Payout Scale: In conjunction |
with the removal of Credit Suisse, the |
CMDC approved an updated relative |
Payout Scale. Rank #11 payout is now 0% |
$44.9 $47.6 | $35.8 $38.8 | $59.6 $63.2 | $46.2 $49.7 | $61.6 $65.9 |
2019 | 2020 | 2021 | 2022 | 2023 |
For additional information and endnotes, please see slide 18
The Firm's average percentage of net income paid to Mr. Dimon continues to rank among the lowest of our peers, demonstrating our
strong pay-for-performance alignment and a
more efficient CEO pay-allocation ratio
(compared to 40% previously) for new and |
outstanding awards |
Common Equity Tier 1 ("CET1") capital |
ratio 4 hurdle: Given increased capital |
requirements since the introduction of this |
risk-based hurdle in 2017, the CMDC |
approved increasing the hurdle by 50 basis |
points, from 7.5% to 8% for new awards |
5
- Executive Compensation - Proposal 2: Advisory Resolution To Approve Executive Compensation
The Firm experienced growth across all of our market-leading lines of business, achieved record financial results, and maintained a fortress balance sheet
Strong Results Across all Lines of Business1, 2 | Leading Franchises | |||
(YoY % Change) | ||||
Revenue | $70.1B | ~28% | ||
Consumer & Community | Pre-Tax Income ex. LLR | $30.0B | ~44% | #1 U.S. Retail Deposit Market Share3 |
Banking ("CCB") | Net Income | $21.2B | ~42% | |
Return on Equity | 38% | ~9% pts | ||
Corporate & Investment
Bank ("CIB")
Revenue | $48.8B | ~1% | |
Pre-Tax Income | $20.1B | ~2% | |
#1 Total Markets and Global IB Fees4, 5 | |||
Net Income | $14.1B | (~5%) | |
Return on Equity | 13% | (~1% pts) | |
Commercial Banking
("CB")
Revenue | $15.5B | ~35% |
Pre-Tax Income ex. LLR | $9.9B | ~47% |
Net Income | $6.1B | #1 Multifamily Lender6 |
~46% | ||
Return on Equity | 20% | ~4% pts |
Asset & Wealth
Management ("AWM")
Revenue | $19.8B | ~12% |
Pre-Tax Income | $6.9B | ~19% |
Net Income | $5.2B | #1 Total Client Asset Flows7 |
~20% | ||
Return on Equity | 31% | ~6% pts |
For additional information and endnotes, please see slide 18
6
- Executive Compensation - Proposal 3: Approval of Amended and Restated Long-Term Incentive Plan
Our Long-Term Incentive Plan is designed to strengthen the alignment of employees' long-term economic interests with those of shareholders
The Board of Directors recommends that shareholders vote FORthe Long-Term Incentive Plan (Proposal 3)
2024 PLAN DETAILS
- We are seeking shareholder approval of our Amended and Restated JPMorgan Chase Long-Term Incentive Plan (the "2024 Plan") to renew the term of the 2021 Plan by four years to a term date of May 31, 2028 and authorize an additional ~38.2M shares, to bring the total number of authorized shares for awards to 81M, which is less than the total number of shares authorized under the 2021 plan by 4M shares
- The 2024 Plan will continue to incorporate our non-employee Director compensation program
- Our shareholders indicated a preference for more frequent requests for approval of a smaller quantity of shares, as opposed to larger quantities less frequently. As a result, the CMDC and the Board considered this feedback in determining the number of shares to request for authorization under the 2024 Plan
- Since 2020, the Firm's employees increased by nearly 55,000 as we continued to invest in our front office, operations and technology. As such, in the 2024 Plan, the total authorized shares per employee will decrease to approximately 261 shares from 333 shares, if approved
Features of the 2024 Plan- The 2024 Plan maintains many of the governance practices and features of the 2021 Plan, including:
- The exclusion of our stock option/stock appreciation rights recycling feature;
- The inclusion of a one-year minimum vesting requirement for the 5% of shares that are exempt from the minimum three-year vesting;
- The reduction of the maximum number of shares that can be granted as Incentive Stock Options from 20M to 7M; and
- The standard of review for actions under the 2024 Plan
KEY DATA ABOUT OUR PRACTICES
We have historically demonstrated prudence in our use of shares for equity compensation and have maintained our annual share usage ("Burn Rate") and potential dilution levels under the Long-Term Incentive Plan in recent years. Furthermore, the Firm has demonstrated the value to shareholders of a disciplined compensation approach with one of the lowest compensation expense ratios amongst our primary financial services peers
HISTORICAL BURN RATE1 | HISTORICAL TOTAL POTENTIAL DILUTION2 | |||||||||||||||
Including share repurchases | Excluding share repurchases | |||||||||||||||
0.8% | 0.8% | 4.5% | ||||||||||||||
0.7% | 0.7% | 4.3% | 4.1% | |||||||||||||
4.0% | 3.8% 3.5% | 4.0% | 3.8% | |||||||||||||
0.6% | ||||||||||||||||
3.6% | 3.2% | |||||||||||||||
2019 2020 2021 2022 20232019 2020 2021 2022 2023
HISTORICAL COMPENSATION EXPENSE RATIO3
2021 | 2022 | 2023 | 45% | 46% | 43% | 45% | ||||||||
41% 38% 39% | 43% | 41% | ||||||||||||
30% 32% 34% | 35% 35% 37% | |||||||||||||
32% 32% 29% | ||||||||||||||
15% 14% 13% | ||||||||||||||
American Express | JPMorgan Chase | Goldman Sachs | Citigroup | Bank of America | Wells Fargo | Morgan Stanley |
For additional information and endnotes, please see slide 18
7
- Executive Compensation - Proposal 10: Shareholder Opportunity To Vote On Excessive Golden Parachutes
Proposal 10 is not compatible with the Firm's compensation program because the Firm does not provide employment or golden parachute agreements
The Board of Directors recommends that shareholders vote AGAINSTthe Golden Parachute shareholder proposal (Proposal 10)
The proposed policy is unnecessary and would provide no meaningful additional benefits to shareholders
1 | 2 | 3 | 4 | 5 | |||||
No Employment or Golden Parachute Agreements
The Firm does not provide golden parachute agreements. There are no employment agreements and NEOs are not entitled to special severance benefits
The key terms of the proposal are not compatible with our Firm's compensation program for our NEOs
Including Equity is Not Market Practice
The inclusion of equity awards does not align with general market practices
Using the proponent's definition, a severance payout would include equity, which represents the majority of annual incentive compensation for all NEOs
Our Severance is Below 2.99x
All employees participate at the same level of severance that is capped at 52 weeks of salary or $400,000 for U.S.-based employees
The proposal would allow severance packages up to
2.99 times the sum of the executive's base salary plus target short-term bonus without shareholder approval
The Firm does not have target short-term bonuses but awards annual variable incentives in cash and equity
Goes Beyond Change in Control
The proposal defines golden parachute payments as that which is paid out or vests due to a senior executive's termination for any reason
This can be interpreted to mean that it should apply beyond a change in control event to payments awarded under any termination trigger, including in the event of retirement, employment termination or resignation
Misleading Peer Comparisons
The proponent notes this proposal received majority support at four other companies but fails to note that each of these companies have employment agreements that provide for additional severance benefits of the type that do not exist at the Firm
Shareholders have not raised specific feedback or concerns relating to the Firm's severance policies or practices
- Shareholders can voice their support or concerns on the Firm's executive compensation program through the annual Say-on-Pay vote and our Board has a demonstrable history of being responsive to shareholders' concerns
- In addition, the Firm's long-term incentive plan is approved by shareholders and governs the specified provisions in the equity award agreements on the treatment of unvested equity awards under certain termination events
8
- Board Composition & Executive Succession Planning - Proposal 1: Election of Directors
Board nominees bring leadership experience, skills and diversity aligned with the Firm's business and strategy with a well-balanced mix of tenure
The Board of Directors recommends that shareholders vote FORour Board nominees (Proposal 1)
Meet Our Board Nominees
Stephen Burke, 65 | Linda Bammann, 68 | Todd Combs, 53 | Alicia Boler Davis, 55 | James Dimon, 68 |
Tenure: 20 | Tenure: 11 | Tenure: 8 | Tenure: 2 | Tenure: 20 |
LID, CMDC*, CGNC | RC*, CMDC | CGNC*, CMDC | RC | Chairman |
Alex Gorsky, 63 | Mellody Hobson, 55 | Phebe Novakovic, 66 | Virginia Rometty, 66 | Mark Weinberger, 62 |
Tenure: 2 | Tenure: 6 | Tenure: 4 | Tenure: 4 | Tenure: 1 |
RC1 | PRC*, RC | AC, PRC | CGNC, CMDC | AC2 |
Mr. Flynn and Mr. Neal have decided to retire from the Board and are not standing for | |||
re-election when their terms expire on the eve of this year's Annual Meeting | |||
Committee Legend | |||
LID | Lead Independent Director | ||
CMDC | Compensation & Management Development Committee | ||
CGNC | Corporate Governance & Nominating Committee | ||
AC | Audit Committee | ||
RC | Risk Committee | ||
PRC | Public Responsibility Committee | ||
*indicates Chair of committee
WE APPOINTED ONE NEW DIRECTOR THROUGH OUR ONGOING RECRUITMENT AND RENEWAL PROCESS
Mark A. Weinberger, 62
Retired Global Chairman and Chief Executive
Officer of Ernst & Young LLP ("EY")
Mr. Weinberger's executive experience and skills were among the Board's recruitment priorities as they complement the Board's existing composition and support effective oversight of the Firm's strategy
Career Highlights
EY, a leading global professional services organization providing assurance, consulting, strategy and transactions and tax services
- Global Chairman and Chief Executive Officer (2013-2019)
- Member, Global Executive Board (2008-2019)
U.S. Government, appointments by four presidential administrations
- Member, President's Strategic and Policy Forum (2017)
- Member, President's Infrastructure Task Force (2015-2016)
- Assistant Secretary, U.S. Department of Treasury (Tax Policy) (2001-2002)
- Member, U.S. Social Security Administration Advisory Board (2000)
- Chief Tax and Budget Counsel, U.S. Senate (1991-1994)
Composition of Board Nominees | |||||||
90% | 50% | 20% | WELL-BALANCED TENURES | ||||
5 | 3 | ||||||
2 | |||||||
Independent | Women | Black or African American | |||||
1-5 years | 6-10 years | 10+ years | |||||
For additional information and endnotes, please see slide 18 |
9
- Board Composition & Executive Succession Planning - Proposal 1: Election of Directors
The Board is focused on executive succession planning and positioning the Firm for continued future success
EXECUTIVE SUCCESSION PLANNING
- Executive succession planning is a priority for the Board and the Firm's senior leadership, with the objective of having a pipeline of the best executives who lead inclusively for today and the future
- The Board continues to oversee management's development of several Operating Committee ("OC") members who are well-known to shareholders as strong potential candidates to succeed Mr. Dimon. Individual OC members have been provided with opportunities to gain exposure to different parts of the business and to deepen their leadership experience in new and expanded roles such as with the recent senior management changes and new alignments announced in January 2024
- The Board believes that these senior management changes and new alignment will help the Firm better serve its clients as well as further develop the Firm's most senior leaders. Should the need arise in the near term, the Board views Daniel Pinto as a key executive who is immediately ready to fulfill the responsibilities of the CEO
RECENT SELECT CHANGES IN OPERATING COMMITTEE, BOARD DIRECTORS AND FIRM STRUCTURE
2021 | 2022 | 20231 | 2024 | |||
Operating | New roles and new OC member | New roles for OC members | New role for OC member | New roles and new OC member | ||
Committee | Jenn Piepszak and Marianne Lake | Daniel Pinto became the Firm's sole | Teresa Heitsenrether became Chief | Jenn Piepszak and Troy Rohrbaugh | ||
became Co-Chief Executive Officers | President and Chief Operating Officer | Data & Analytics Officer | were named Co-CEOs of the | |||
of CCB | Sanoke Viswanathan became Chief | Retirement | expanded Commercial & Investment | |||
Bank (expanded CIB) | ||||||
Jeremy Barnum became Chief | Strategy and Growth Officer | Carlos Hernandez retired as Executive | ||||
Financial Officer and joined the OC | Doug Petno became Co-CEO of | |||||
Chair of Investment & Corporate | ||||||
Global Banking | ||||||
Sanoke Viswanathan joined the OC | Banking | |||||
Marianne Lake became sole CEO | ||||||
Retirement | ||||||
of CCB | ||||||
Gordon Smith retired as co-President | ||||||
Tim Berry, Global Head of Corporate | ||||||
& co-COO and CEO of CCB | ||||||
Responsibility and Chair of the | ||||||
Mid-Atlantic region, joined the OC | ||||||
Board Directors | New Lead Independent Director | New Board member | New Board member | New Board member | ||
Stephen Burke became Lead | Alex Gorsky joined the Board | Alicia Boler Davis joined the Board | Mark Weinberger joined the Board | |||
Independent Director | Retirements | |||||
The Board announced the retirements | ||||||
of Tim Flynn and Michael Neal | ||||||
Firm structure | Business acquisition | Business reorganization | ||||
Completed acquisition of First | Combined the Corporate and | |||||
Republic Bank2 | Investment Bank (formerly CIB) and | |||||
Formed new organization | Commercial Bank (formerly CB) into | |||||
the expanded Commercial and | ||||||
Formed the Data & Analytics | ||||||
Investment Bank (expanded CIB) | ||||||
Organization to assist with firmwide | ||||||
adoption of AI | ||||||
For additional information and endnotes, please see slide 18 | ||||||
10 | ||||||
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JPMorgan Chase & Co. published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 22:22:02 UTC.