Merging Banks Planning Big Paydays

JPMorgan and Bank One open the vaults to take care of the two men at the top.

The planned merger between JPMorgan Chase and Bank One is clearly a combination of equals when it comes to the compensation of the two top executives.

According to documents filed last week with the Securities and Exchange Commission, JPMorgan Chase chairman and chief executive William Harrison Jr. will serve as CEO of the combined company for the first two years after the deal is completed. Jamie Dimon, Bank One’s CEO, will initially serve as president and chief operating officer, then become CEO after two years.

Although he will be the No. 2 executive, Dimon will receive no less than 90 percent of the salary, bonus, and option grants that Harrison will receive, according to the filing.

”You would expect to see a greater difference in pay,” Claude Johnston, a compensation consultant that advises financial firms at Pearl Meyer & Partners, told the Chicago Sun-Times. ”A 90 percent linkage would seem to be more than usual.”

The merger agreement will also amend Harrison’s severance arrangements to bring them more in line with Dimon’s. Harrison will receive severance that is the greater of $22.2 million, or the sum of three times his base salary and three times his annual cash bonus, should he wind up on the street. Under Chase’s policy before it agreed to the merger, Harrison would have been due to receive approximately $18.7 million.

Of course, both individuals have been well paid until now.

Last year Harrison received a salary of $5.7 million, more than double the $2.3 million he earned the year before, and his bonus was nearly $428,000, up 35 percent from the prior year. He also netted more than $2.2 million from exercising stock options and selling the underlying shares.

Dimon did even better. He received a $1 million salary for the second straight year but also was awarded a $5 million bonus, up from $3 million the year before. He also received about $2.5 million in restricted stock. In addition, in 2003 Dimon netted more than $14.6 million from exercising options, giving him a total pay package of more than $22 million.

The chief financial officers of the two companies didn’t fare too poorly either.

Chase CFO Dina Dublon received a $500,000 salary and a $4.75 million bonus, and she enjoyed a $325,364 gain from exercising stock options. Bank One CFO Heidi Miller, who joined the company in March 2002, earned around $4 million, including a $2.3 million bonus and nearly $1.2 million in restricted stock.

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