Scanning this morning’s news I came upon a disturbing article impacting many of us.
The Chairman and Chief Executive of JP Morgan, James (Jamie) Dimon, had his compensation for 2012 CUT IN HALF by his bosses, the bank’s Board of Directors.
He will receive 50% of his previously stated, previously expected, and possibly previously spent pay.
Mr. Dimon will receive only $11.5 million for the hard work, long hours and other sacrifices made in the pursuit of making money for his company, himself and other JP Morgan executives, with perhaps a few bucks left over for other employees and shareholders.
Mr. Dimon received total compensation of $23.1 million in 2011.
Executives like Mr. Dimon do not receive simply a salary, a paycheck deposited in their checking account regularly. Executive compensation is more complicated, comprised of salary, bonus, stock options and other monetary incentives. Mr. Dimon’s 2012 bonus was significantly cut, resulting in the reduction.
But a 50% decrease? The poor guy. How can he possibly make do with half the expected sum?
And how, you might ask, does that impact the rest of us?
First of all, Mr. Dimon will pay less in taxes than guesstimated. Since the top 1% pays so much in taxes every year, the U.S. Treasury may feel the loss of thousands of Dimon dollars. Will the budget ever recover? Will the rest of us be forced to make up the shortfall?
I would guess most Americans do not make $23.1M or even $11.5M in one year or possibly in their working lifetime. But some of these lesser paid, less wealthy, stock option-less folk benefit from Dimon dollars.
A lot of people work in establishments that directly or indirectly service Dimon’s personal and business needs and therefore benefit from his largesse. Think of it as the business trickle-down principle. I have to admit, however, the bucks have not trickled down to my home or hometown, but I am still patiently waiting.
A few of the ways average Americans may benefit from Dimon dollars:
· Restaurant meals – business meals, social meals, eat in and take out.
· Clothing – It must cost a lot of money to keep Dimon looking top-executive snazzy. And what about the rest of his family? They cannot go out in public in common off-the-hangar rags.
· Coffee, other drinks and snacks – Dimon must always be on the go. How many Starbucks drinks does he consume in a week, a month, and a year? How often does he duck into the nearest coffee shop, Auntie Ann’s pretzel stand, Dunkin’ Donuts or whatever for a quick snack?
· Gifts – I imagine there are a lot of gifts to buy throughout the year for staff, family, friends, relatives and others.
· Vacations – Dimon and his family probably do not spend a lot of time checking Priceline, Kayak, and other Internet sites looking for the lowest air and hotel rates when planning a vacation. My guess is he and his entourage, for business and pleasure, fly business and/or first class. They probably fly private jets too. They stay at luxurious (translation: expensive) five-star hotels. Enjoy pricey five-star restaurants. Use taxis and private limousines and, hopefully, tip well.
· Staff – I would venture a guess Dimon’s wife does not clean the toilets in their New York penthouse. How many individuals cater to the business and personal needs of Dimon and his family? Will he have to lay off any staff now, cut their hours and/or lower their pay?
There are lots of other areas Dimon dollars are spread around the economy – entertainment expenses, home furnishings, housing costs, personal care items, charities, (personal) investments, and the list goes on. Not being a member of the privileged 1%, their spending habits are not familiar to me. But I can imagine…
Mr. Dimon, I understand your dilemma and the problems involved in reducing your personal budget and limiting expenses.
Should you need help planning and organizing your downsized lifestyle, please do not hesitate to contact me.
Meanwhile I hope you realize many of us have experienced similar difficulties in recent years. We sympathize and wish you well.