JP Morgan Chase 2008 Annual Report Download - page 30

28
• We have always paid a significant percentage of
our incentive compensation in stock, approximately
50% for our senior management team. That stock
vests over multiple years.
• Our senior management team generally must retain
and hold approximately 75% of all stock ever
received from the company.
There are a lot of legitimate complaints about compen-
sation – not just at financial firms but at all types of
companies. Good companies know that compensation
can cause bad incentives. They know there is no magic
to a calendar year and that they must be careful not to
pay people too much in a current year – due to either
exuberance or real market pressures. Compensation is
one of the most complex issues we deal with because
it is important to the individuals and the company.
Improperly done, it can destroy a company. We strive
mightily to hire, train and retain the best talent –
smart, ethical, hard-working, entrepreneurial individu-
als – and getting compensation right is a critical part
of this process.
Vl. GETTING COMPENSATION RIGHT
IS CRITICAL
Looking back at last year, I continue to reflect on how
proud I am of the people in this company. It often is
in the toughest of times that one learns what people
are really made of. Our employees worked harder than
ever and performed admirably for the company, for
our clients and even for our country under enormously
challenging conditions. Throughout the unexpected
events and incredible pressure of 2008, it was hard
not to be impressed by the intellect, work ethic and
strength of character of the individuals at this firm.
I know many Americans are concerned about compen-
sation practices across the financial services industry,
and many of the concerns are quite legitimate. At
JPMorgan Chase, we believe we have been at the fore-
front of sensible compensation practices. Our process
is disciplined and rigorous, and we have always sought
to reward the long-term performance of our employees.
Our practices reflect this:
• We pay our people for performing well over multi-
ple years and for helping to build a company with
long-term, sustainable performance.
• In looking at performance, we always try to properly
account for risk being taken. We are also mindful
that a rising tide lifts all boats, and we do not want
to pay people on that basis.
• Performance to us has never been simply a financial
measure. It has always included the broader contri-
bution a person brings to a company, such as main-
taining integrity and compliance; recruiting and
training a diverse, outstanding workforce; and build-
ing better systems and innovation.
• We have had in place a bonus recoupment policy
beyond that required by Sarbanes-Oxley.
• We don’t have: change-of-control agreements, special
executive retirement plans, golden parachutes,
special severance packages for senior executives
or merger bonuses.