JPMorgan says CEO transition is a top priority, cites potential Dimon successors

JPMORGAN Chase’s board said an orderly CEO transition was a top priority for the largest US bank in the medium term, more than 18 years after Jamie Dimon took the helm.

The board is “spending significant time on developing operating committee members who are well-known to shareholders as strong potential CEO candidates,” it said in a proxy statement.

They include Jennifer Piepszak and Troy Rohrbaugh, recently appointed co-CEOs of JPMorgan’s expanded commercial and investment bank, Marianne Lake, CEO of consumer and community banking, and Mary Erdoes, CEO of asset and wealth management.

The lender has gradually built the dialogue around succession since Dimon’s emergency surgery in March 2020, said Chris Marinac, director of research at financial adviser Janney Montgomery Scott.

“However, I don’t think that this means that Dimon is leaving tomorrow, he could be here for a few more years,” Marinac said.

Succession is in focus across Wall Street. Morgan Stanley’s new CEO Ted Pick took over at the start of the year from James Gorman, who had run the bank for 14 years. Peter Orszag took the reins at Lazard in October. And other banks have rotated executives around divisions to give them a more well-rounded experience.

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Brian Mulberry, a client portfolio manager at Zacks Investment Management, predicted Dimon would leave within five years. Mulberry holds stock in JPMorgan and other large banks.

“Considering the increased discussion and disclosures around succession, the target date in my mind has to be within two to five years,” Mulberry said. “Otherwise you wouldn’t be having these types of letters, disclosures, discussions very publicly,” he said, calling the approach prudent.

Meanwhile, president and chief operating officer Daniel Pinto continued to be listed as the executive who could step in for the CEO in the near term, as he did in 2020 when Dimon had emergency heart surgery.

“Should the need arise in the near-term, we view Mr Pinto as a key executive who is immediately ready to fulfill the responsibilities of the CEO,” the statement said.

Piepszak and Lake are widely seen as the likely front runners, Scott Siefers, an analyst at Piper Sandler, said in a note in January after the reshuffle.

Piepszak has a slight edge, given the investment bank will be the key driver of revenue growth over the next two years, Mulberry said. “The CEO of that business is more likely to succeed Dimon,” he added.

In her nearly three decades at JPMorgan, Piepszak served as its finance chief from 2019 to 2021, run card services and business banking. The executive also spent 17 years climbing the ranks in investment banking.

Lake, a two-decade veteran of the bank, previously served as finance chief from 2013 to 2019. She leads the consumer division that accounts for the bank’s largest chunk of revenue, bringing in US$18 billion in the fourth quarter.

The two women were among the executives in charge of integrating failed First Republic Bank after JPMorgan bought it last year. Their ascendancy would diversify Wall Street’s top ranks after Jane Fraser at Citigroup became the first woman to lead a major US bank in 2021.

“They definitely have a solid list of top internal candidates, many of whom are female,” said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.

In his annual letter to shareholders on Monday (Apr 8), Dimon hailed US leadership and economic power to shareholders, invoking “liberty and justice for all.”

Dimon, who took the reins in 2006, is among a group of financial CEOs whose names have been floated for senior economic roles in government.

The Wall Street Journal last week reported that allies of former US President Donald Trump were considering senior Wall Street executives, including Dimon, for the role of Treasury secretary.

Dimon’s compensation climbed about 4.3 per cent to US$36 million in 2023. Pinto’s total compensation came in at US$30 million, while Erdoes was paid US$27 million.

Piepszak and Lake each earned US$18.5 million in 2023, while chief financial officer Jeremy Barnum earned US$15 million.

“Jamie Dimon is irreplaceable,” and “has produced extraordinary results for shareholders,” said Macrae Sykes, a portfolio manager at Gabelli Funds, which holds shares in the bank.

“JPMorgan will be different after Jamie Dimon, but confidence in the brand, customer engagement and outlook for future shareholder returns shouldn’t materially change under new leaders,” he added.

The lender also announced that two directors on its board – Timothy Flynn and Michael Neal – have decided to retire when their terms expire on the eve of its 2024 annual meeting of shareholders in May.

JPMorgan’s shares rose slightly in morning trading. It is set to report first-quarter results on Friday. REUTERS