JPMorgan Chase & Co. CEO Jamie Dimon said the Western world faces “challenges at every turn” but the U.S. economy remains strong, according to his annual letter to shareholders.
Dimon cited a myriad of difficulties, including unprecedented government actions, a strong recovery after a sharp and deep global recession, a highly polarized U.S. election, mounting inflation, a war in Ukraine and dramatic economic sanctions against Russia and an economic recovery in the wake of the COVID-19 pandemic.
The Russian sanctions could impact the bank’s business by $1 billion over time, he revealed.
Despite these potential setbacks, Dimon said said the current times also offer an opportunity to “put aside our differences, offer solutions and work with others in the Western world to come together in defense of democracy and essential freedoms, including free enterprise.”
Separately JPMorgan also filed its proxy statement which disclosed Dimon’s total compensation of $84.4 million for 2021, up from $31.7 million in 2020, according to the bank.
The latest figure includes $52.6 million in option awards for 2021, up from no option awards in 2020.
“The special award granted to Mr. Dimon reflects the board’s desire for him to continue to lead the firm for a further significant number of years,” the company said. “The board also took into account other factors, including the firm’s strong performance under Mr. Dimon’s stewardship since 2005, his exemplary leadership, and his significant contributions to the firm’s success during his tenure.”
Dimon’s total annual compensation in 2021 rose to $34.5 million from $31.5 million in 2020 and 2019. The increase was due to a $3 million boost he received in performance share units (PSUs) to $28 million in 2021 from $25 million.
His salary remained at $1.5 million.
Shares of JP Morgan Chase are down 14.6% so far in 2022, compared to a drop of 4.6% by the S&P 500 and a loss of 4.2% by the Dow Jones Industrial Average. The Financial Select Sector SPDR ETF
is down 2.1%.
Russia’s invasion of neighboring Ukraine and sanctions imposed on Russia by other world governments will slow the global economy — and things could get worse, Dimon said.
Adding persistent inflation that will require higher interest rates and a shift away from quantitative easing to quantitative tightening, and “the confluence of these factors may be unprecedented,” Dimon said.
The world was facing a range of other challenges before war broke out, including nuclear proliferation, cybersecurity risks, terrorism, climate change and vast inequities in society, he said.
That makes strong American leadership more crucial than ever.
“Power abhors a vacuum, and it should be increasingly clear to all that without strong American leadership, chaos likely will prevail,” he wrote.
Dimon said the bank’s management looks past its short-term stock price because over time, the stock has outperformed. In the long run, its share price “is a measure of the progress we have made over the years,” he noted.
Dimon said he agreed with “my friend, Warren Buffett” (CEO of Berkshire Hathaway
) that his company’s success is predicated upon the “extraordinary conditions” created by the U.S. government.
Dimon concluded his letter by crediting the bank’s employees with “guts, brains, integrity and enormous capabilities to navigate personally challenging circumstances while maintaining high standards of excellence.”
In terms of the U.S. economy, the consumer “is in excellent financial shape (on average), with leverage among the lowest on record, excellent mortgage underwriting (even though we’ve had home price appreciation), plentiful jobs with wage increases and more than $2 trillion in excess savings, mostly due to government stimulus,” he said.
Consumer spending over the last several months is 12% above pre-COVID-19 levels, while recognizing that the account balances in lower-income households, smaller to begin with, are going down faster and that income for those households is not keeping pace with rising inflation, he said.