JP Morgan Chase 2006 Annual Report Download - page 14

12
We plan to continue the momentum with the following
steps:
• We are strengthening our team to better manage the
environmental and social risks within our deal flow.
• We are increasing our investments in energy-efficient
projects as part of our commitment to reduce our
greenhouse gas emissions.
• We are strengthening our efforts to offer clients prod-
ucts and services that help them reduce their green-
house gas emissions.
• We are continuing to advance the public policy debate
on the environmental effectiveness and economic
efficiency of greenhouse gas emission reductions.
We are deepening our community involvement
• We intend to work more closely with government
officials, regulators, communities and responsible
third parties to improve both public policy and
our company.
• Our philanthropic investment program is strategically
focused on enhancing life in the communities we serve.
In 2006, JPMorgan Chase invested more than $110
million in nearly 500 cities across 33 nations. In addi-
tion, we reinvigorated our strategic focus toward fund-
ing organizations and programs that are addressing the
most pressing needs in our communities.
• In 2007, the JPMorgan Chase Foundation is taking
a disciplined approach to helping our customers,
employees, shareholders and neighbors in three critical
need areas we call Live, Learn, and Thrive. In “Live,”
we focus on basic needs, such as housing, job training,
financial literacy and social inclusion. The area we call
“Learn” focuses on helping young people succeed in the
education process, from birth through higher education,
especially in impoverished areas. To help our communi-
ties “Thrive,” we support vital environmental, arts and
cultural institutions and initiatives. This year, we are
launching our “Community Renaissance Initiative” in
eight key U.S. markets, dedicating a large percentage of
our philanthropic funding, energy and expertise to sub-
stantially strengthen high-need neighborhoods.
III. A FEW CLOSING COMMENTS
Corporate governance: Board of Directors
I believe your Board is functioning extremely well. Its
members are totally engaged in and dedicated to set-
ting – and meeting – the highest standards of gover-
nance. Discussions about our people, our strategies,
our opportunities, our priorities and our obligations
are open and substantive. The quality and productivity
of these conversations should be even better as we
reduce the size of the Board to about 12 members.
Compensation and ownership
While our Proxy Statement describes our philosophy in
detail, I’d like to note here the key underpinnings of our
compensation system: a) we believe a substantial portion
of compensation should be tied to performance, particu-
larly for senior employees; b) an ownership stake in the
firm best aligns our employees’ and shareholders’ interests;
c) compensation should be market-based; and d) we strive
for long-term orientation both in the way we assess
performance and in the way we structure compensation.
In addition, it’s important to note some specifics:
• Your senior executive team received 50% of their
incentive compensation in restricted stock units that
vest over time.
• Your senior management team must keep 75% of all
the stock they acquire from restricted stock units and
option exercises until they leave the firm. I have held
all of my stock compensation and plan to continue
doing so.