JP Morgan Chase 2015 Annual Report Download - page 167

JPMorgan Chase & Co./2015 Annual Report 157
Capital actions
Dividends
The Firm’s common stock dividend policy reflects JPMorgan
Chase’s earnings outlook, desired dividend payout ratio,
capital objectives, and alternative investment opportunities.
Following receipt on March 11, 2015, of the Federal
Reserve’s non-objection to the Firm’s 2015 capital plan
submitted under its CCAR, the Firm announced that its
Board of Directors increased the quarterly common stock
dividend to $0.44 per share, effective with the dividend
paid on July 31, 2015. The Firm’s dividends are subject to
the Board of Directors’ approval at the customary times
those dividends are declared.
For information regarding dividend restrictions, see Note 22
and Note 27.
The following table shows the common dividend payout
ratio based on reported net income.
Year ended December 31, 2015 2014 2013
Common dividend payout ratio 28% 29% 33%
Common equity
During the year ended December 31, 2015, warrant
holders exercised their right to purchase 12.4 million
shares of the Firm’s common stock. The Firm issued 4.7
million shares of its common stock as a result of these
exercises. As of December 31, 2015, 47.4 million warrants
remained outstanding, compared with 59.8 million
outstanding as of December 31, 2014.
On March 11, 2015, in conjunction with the Federal
Reserve’s release of its 2015 CCAR results, the Firm’s Board
of Directors authorized a $6.4 billion common equity (i.e.,
common stock and warrants) repurchase program. As of
December 31, 2015, $2.7 billion (on a settlement-date
basis) of authorized repurchase capacity remained under
the program. This authorization includes shares
repurchased to offset issuances under the Firm’s equity-
based compensation plans.
The following table sets forth the Firm’s repurchases of
common equity for the years ended December 31, 2015,
2014 and 2013, on a settlement-date basis. There were no
warrants repurchased during the years ended December
31, 2015, 2014, and 2013.
Year ended December 31, (in millions) 2015 2014 2013
Total number of shares of common stock
repurchased 89.8 82.3 96.1
Aggregate purchase price of common
stock repurchases $ 5,616 $ 4,760 $ 4,789
The Firm may, from time to time, enter into written trading
plans under Rule 10b5-1 of the Securities Exchange Act of
1934 to facilitate repurchases in accordance with the
common equity repurchase program. A Rule 10b5-1
repurchase plan allows the Firm to repurchase its equity
during periods when it would not otherwise be repurchasing
common equity — for example, during internal trading
“blackout periods.” All purchases under a Rule 10b5-1 plan
must be made according to a predefined plan established
when the Firm is not aware of material nonpublic
information.
The authorization to repurchase common equity will be
utilized at management’s discretion, and the timing of
purchases and the exact amount of common equity that
may be repurchased is subject to various factors, including
market conditions; legal and regulatory considerations
affecting the amount and timing of repurchase activity; the
Firm’s capital position (taking into account goodwill and
intangibles); internal capital generation; and alternative
investment opportunities. The repurchase program does not
include specific price targets or timetables; may be
executed through open market purchases or privately
negotiated transactions, or utilize Rule 10b5-1 programs;
and may be suspended at any time.
For additional information regarding repurchases of the
Firm’s equity securities, see Part II, Item 5: Market for
registrant’s common equity, related stockholder matters
and issuer purchases of equity securities on page 20.
Preferred stock
During the year ended December 31, 2015, the Firm issued
$6.0 billion of noncumulative preferred stock. Preferred
stock dividends declared were $1.5 billion for the year
ended December 31, 2015. Assuming all preferred stock
issuances were outstanding for the entire year and
quarterly dividends were declared on such issuances,
preferred stock dividends would have been $1.6 billion for
the year ended December 31, 2015. For additional
information on the Firm’s preferred stock, see Note 22.
Redemption of outstanding trust preferred securities
On April 2, 2015, the Firm redeemed $1.5 billion, or 100%
of the liquidation amount, of JPMorgan Chase Capital XXIX
trust preferred securities. On May 8, 2013, the Firm
redeemed approximately $5.0 billion, or 100% of the
liquidation amount, of the following eight series of trust
preferred securities: JPMorgan Chase Capital X, XI, XII, XIV,
XVI, XIX, XXIV, and BANK ONE Capital VI. For a further
discussion of trust preferred securities, see Note 21.