After posting my most recent article about the JP Morgan Chase trading loss last year, their chief executive's pay was cut by 50%. This honestly has made my day because I was dumbfounded when I read an article yesterday telling me that he was making an obscene amount of money. The most ironic thing is that JP Morgan Chase profits are soaring.
Although Mr. Dimon’s compensation fell sharply, he dodged much of the criticism for the trading losses in two reports released on Wednesday.
Personally I think they went soft on Mr. Dimon. He is still keeping his base salary of 1.5 million this year. I guess doing something little is better than nothing, right?
Here is the link to the article.
Its start for making executives pay for some of the bad choices they make. Its not much now but who knows other firms might do it.
ReplyDeleteHere is a good blog entry explaining a little background about these kinds of salary cuts:
ReplyDeletehttp://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/16/banker-pay-is-finally-falling/
While it is always nice to see pay cuts for those who make a little too much, the main focus should be that companies are finally focusing on the long run of their profits rather than their short term profits. Companies are realizing that money can only be spent once and once its gone it can not be used again.
ReplyDeleteI guess it's nice to see that even top notch executives can receive pay cuts once in a while. I think I would still be very happy with $11.5 million though if I were him.
ReplyDeletePart of the reason why CEOs are so highly paid is because when you're talking about a company that makes billions of dollars, a CEO that increase that amount by even something small like 0.5-1% would increase the company's profits by tens of millions of dollars. If you believe that CEOs have even slight positive impacts on a company's bottom line, it's worth it to bid millions of dollars for them.
ReplyDeleteI agree with Phillip, when your company is making that much money and your employees salaries are at a level of maximum efficiency, where would you allocate all that revenue?
ReplyDelete