The dilemma surrounding Jamie Simon's succession at JPMorgan

Don't worry, despite this headline, there is nothing currently going on why he should leave. I found the article interesting yesterday, so I want to share it here too. There has been more discussion recently about the opinion on $BRK-B+0.9% and what the implications would be if Warren Buffett or Charlie Munger were to leave.

Introducing Jamie Simon. The now 67 year old billionaire, ranked 4 times in the top 100 most influential people in the world. He's chairman and CEO of JP Morgan Chase. $JPM+1.9% Started out as a trader, banker for smaller companies. In 2000, he became CEO of Bank One, then the fifth largest bank in the country. He then became president and chief operating officer in 2004 after merging with $JPM+1.9%. A year later, he was named CEO. In 2006, he was named chairman and president.

Now the question arose as to what would happen when he one day ceased to run the largest and most profitable bank in the country. And possibly, who will be able to replace him?

"The problem," said banking analyst Mike Mayo of Wells Fargo. "My best guess would be a 5% drop in the stock if Jamie suddenly left. That would make him a $20 billion man." That's already a pretty sizable drop for someone who has more invested in the company. This issue has also become more important recently with the recent bailout of First Republic $FRC (I gave the old ticker, it's different now after the takeover). This takeover has increased their reach, influence, and profits at the same time. It also firmly established Dimon as the industry's chief savior.

Dimon, 67, has made it clear that he has no plans to leave anytime soon. But he has also openly mused about life after JPMorgan.

"I can't do this forever, I know that," Dimon told analysts on May 22. "But my intensity is the same. I think when I don't have that intensity, I should leave." On the list of candidates, according to a person familiar with the bank's succession planning, is longtime JPMorgan $JPM+1.9% CEO Daniel Pinto, who could step in if something suddenly goes wrong. There's already a plan inside the bank for what happens if Jamie Dimon gets "hit by a bus" (kind of bizarre when your colleagues are planning such a death for you)🤦‍♂️

If Dimon stays for another three to five years, the two consumer banking chiefs are seen as pioneers to replace him: Marianne Lake and Jennifer Piepszak. Other executives could get consideration if Dimon stays longer.

Dimon admitted to Bloomberg last Wednesday that the idea of running for public office had crossed his mind. "I love my country and maybe one day I'll serve my country in one capacity or another," he said. He has also been frequently linked to major roles in Washington over the years. During President Obama's time in office, he was often mentioned as a possible Treasury secretary. Billionaire Warren Buffett even voiced his support in 2012, saying Dimon would be the best choice for the job. On Wednesday, another billionaire hedge fund manager, Bill Ackman, urged Dimon to run for president as a Democrat in 2024. He says he could beat President Biden in the primary and former President Donald Trump in the general election.

Clearly, yeah he's a really influential guy. But $JPM+1.9% shareholders need not worry until at least 2026. Why? The board has made it clear that they want him to run the bank that much longer. The reason is a special retention bonus of 1.5 million options that the board granted Dimon in 2021. He can't exercise those options until 2026 and must stay at the bank for the entire time if certain performance goals are met.

The current expected value of the award is around $49 million, according to Andy Restaino of Technical Compensation Advisors. It is not exercisable unless JPMorgan stock recovers $149, the price at the time of the award. The bank's shares closed Friday at $140.47.

Finally, how do you view the company's stock? It's obvious that this man knows what he's doing and is good at it when he's respected in this way by others in high places who would even see him as a candidate for President of the United States. What will happen next, no one knows, but for now I think the bank is in good hands and growth is yet to come, those who bought in the downturn did very well. 😊