Dimon’s bonus slashed on London Whale losses

 
Tim Wallace
Follow Tim
JP MORGAN chief Jamie Dimon’s pay has been halved this year after the bank lost $6.2bn (£3.9bn) on bad derivatives positions built up by the so-called London Whale, the bank revealed yesterday.

Last night the bank came to an out of court settlement with the Whale’s former boss Javier Martin-Artajo.

The bank declined to comment, but the proceedings began shortly after JP Morgan announced it was planning to claw back bonuses from those involved in the trades.

Jamie Dimon’s pay has been slashed from $23m in 2011 to $11.5m in 2012, made up of $1.5m in salary plus bonus payments made up of restricted stock. He can access half of those stock awards after two years and the other half after a third year.

JP Morgan yesterday released a major internal report into the chief investment office’s (CIO) losses, which found Dimon should bear some responsibility for the blunder.

“More should have been done regarding the risks, risk controls and personnel associated with CIO’s activities, and Mr Dimon bears some responsibility for that,” said the report, which was written by a taskforce appointed by the board.

Dimon “could have better tested his reliance on what he was told” by his juniors, it added.

But a wide range of other staff were blamed too, beginning with the traders and managers responsible, who have resigned or been fired and had their bonuses clawed back.

Further up the bank, chief investment officer Ina Drew failed to ensure managers understood the flawed trading strategy or that controls were working properly, and underestimated the scale of the losses early in 2012, the report found. She has retired and given back recent bonuses.

Barry Zubrow, head of the firm-wide risk organisation until January 2012, was also blamed for the “inadequacies of [his department’s] limits and controls on the Synthetic Credit Portfolio.”

And chief finance officer Douglas Braunstein was also allocated blame “for the CIO Finance organization’s failure to have asked more questions or to have sought additional information about the evolution of the portfolio during the first quarter of 2012.”

The report also found Dimon acted rapidly once the crisis was uncovered, changing the personnel in affected departments and shaking up controls.