Buffett Supports Dimon’s Dual Roles 100% at JPMorgan
Warren Buffett, who has said he personally owns shares of JPMorgan Chase & Co. (JPM), is backing the bank’s Chairman and Chief Executive Officer Jamie Dimon as shareholders vote this month on whether to split his roles.
“I’m 100 percent for Jamie,” Buffett told Bloomberg Television’s Betty Liu yesterday in Omaha, Nebraska. “I couldn’t think of a better chairman.”
Calls for Dimon, 57, to relinquish the chairmanship have mounted since New York-based JPMorgan disclosed risk-control lapses on derivatives bets last year that fueled more than $6.2 billion of losses. In March, the company’s board urged investors to vote against naming a separate chairman at the May 21 meeting, saying that Dimon’s dual role remains the “most effective leadership model.”
Buffett said in November that Dimon would be the best candidate to lead the U.S. Treasury Department in a financial crisis. President Barack Obama eventually nominated Jacob J. Lew to the post vacated by Timothy F. Geithner.
Investors would risk shortening Dimon’s tenure if they appoint a separate chairman and their company’s stock may lose its “premium valuation,” Charles Peabody, an analyst at Portales Partners LLC, said last month in a note to clients.
JPMorgan, the largest U.S. bank, advanced 9.4 percent since Dec. 31 through yesterday in New York trading after climbing 32 percent in 2012, the third straight year in which the company posted record profit. A coalition of retirement plans, including the AFSCME pension fund, is pressing to separate Dimon’s roles.
Buffett, 82, holds both roles at Berkshire Hathaway Inc. (BRK/A), the company he built into a business valued at more than $260 billion with operations in insurance, energy, railroads, manufacturing and retail. His remarks yesterday came in advance of Berkshire’s May 4 annual shareholder meeting, which draws tens of thousands of attendees to Omaha’s CenturyLink Center each year.
Succession is often a topic at the gathering. Buffett wrote in a letter last year that the board had agreed on a candidate to fill the CEO role once he’s gone, without identifying the individual. He has said his son, Howard, a board member since 1993, could be chairman, once he’s gone.
Berkshire will probably raise pay for the next CEO, Buffett said yesterday, though the ultimate decision about compensation will rest with directors.
“I’ve written a memo to the board in terms of how they should design a pay package,” Buffett told Liu. “It isn’t $100,000 a year.”
Buffett, the world’s third-richest person, with an estimated fortune of more than $57 billion, has earned a salary of $100,000 from Berkshire for more than 25 years, according to the company’s most recent proxy statement. Last year, he gave back half of that to cover personal expenses, such as postage and phone calls.
The next CEO “can probably make a lot more money running Berkshire than any other job they can find,” Buffett said. “It’s a huge enterprise. If they can take a company that’s worth $250 billion and turn it into something that’s worth $500 billion, they are entitled to make a lot of money.”
Ron Olson, a Berkshire director since 1997, said the board solicited Buffett’s advice on pay, even though the practice is unconventional. The billionaire sets compensation for the heads of Berkshire’s operating businesses.
“I don’t think there’s anybody who designs pay structures that are more responsive and responsible and simple than he does,” Olson said today in a Bloomberg Television interview. “That’s why the board wanted to get his ideas for how would you look at this pay structure for a person whose reach is across the company, not just one of the subsidiaries.”
While Buffett has said that the next CEO will be a man, Olson added that the company could name a woman to the post in the future.
Shareholders are set to elect Meryl Witmer as a Berkshire director this weekend. The fund manager will be the third woman on the board. Buffett took questions yesterday at the University of Nebraska Omaha about advancing women in the workplace, including at Berkshire.
“You’re going to see more women representing Berkshire at every level as we go forward,” Olson said today.
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