JPMorgan investors show support for Dimon in cancer fight

CEO tells investors and shareholders he'll continue to run the bank 'as normal' during treatment

Jul 2, 2014 @ 11:26 am

Jamie Dimon, whose eight years atop JPMorgan Chase & Co., have made him one of Wall Street's most powerful leaders, said he'll start treatment for throat cancer, raising new questions about succession plans at the biggest U.S. bank.

Mr. Dimon, the company's chairman and chief executive, told employees and shareholders in a memo his condition is curable and that he'll continue running the firm “as normal” during eight weeks of radiation and chemotherapy. The treatment will start soon at Memorial Sloan Kettering Cancer Center in New York, limiting his travel, the CEO said.

Mr. Dimon, 58, has led New JPMorgan since the end of 2005, navigating the 2008 financial crisis without a loss and doubling annual profit as the lender's shares climbed about 45 percent. Six months ago, the board credited his ability to resolve government probes of the bank.

The illness will revive questions about how the panel would theoretically handle his succession, said Ralph Cole, a portfolio manager at Ferguson Wellman Capital Management Inc.

“Transition has always been a question and now that will be at the top of investors' minds,” Mr. Cole said. “They have to be very vocal about who's going to be stepping up during the eight-week period. They've got to be clear with everybody about who that is.”

THOROUGH PLANNING

The bank has deep contingency and succession plans, and Dimon's illness may serve as no more than a valuable “fire drill,” said Michael Farr, president of Farr Miller & Washington, an asset manager that oversees more than $1.1 billion, including JPMorgan shares.

“The good news is that every indication is that they will never be needed and that Jamie Dimon has many years to work and that he'll retire on his own schedule as a much older man,” Farr said. “It feels unfair to watch someone who has really been through so much have to suffer through this.”

JPMorgan declined 0.9% to $57.06 at 10:22 a.m. in New York. The shares have slipped 2.5% this year, compared with the 3.6% advance of the 24-company KBW Bank Index.

Mr. Dimon canceled a planned business trip to Europe this week in which he was to meet with the prime ministers of Greece and Italy, said Joe Evangelisti, a spokesman for the bank. The CEO probably will cut back on client visits during the treatment, Mr. Evangelisti said.

'EXCELLENT PROGNOSIS'

The board has succession plans for the short-term, medium-term and long-term should they be needed, Mr. Evangelisti said, declining to disclose the plans.

Mr. Dimon told colleagues he wants to remain CEO for an additional five years, a person with direct knowledge of the matter said in March. In the memo this week, he said he feels good, is keeping the board fully apprised, and that he'll say more if his condition changes.

“The prognosis from my doctors is excellent, the cancer was caught quickly and my condition is curable,” Mr. Dimon wrote, according to a statement yesterday from the bank. “I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal.”

“The cancer is confined to the original site and the adjacent lymph nodes on the right side of my neck,” he wrote. “Importantly, there is no evidence of cancer elsewhere in my body.”

'ICONIC CEO'

The son of a stock broker, Mr. Dimon is known for his charm and brusque manner. In 2011, he publicly challenged Federal Reserve Chairman Ben Bernanke over new regulations. In 2012, Mr. Dimon said the nation's housing market would have been fixed faster if he had been put in charge.

“He's one of the iconic CEOs who's totally identified with a company,” said Nancy Bush, a bank analyst who founded NAB Research. “It's tremendously important that people know he's still there, and I'm sure that will still be happening.”

The bank posted its first quarterly loss under Mr. Dimon's leadership last year as it agreed to pay $23 billion in penalties and settlements. Full-year net income fell 16% to $17.9 billion. Profit will rebound to $21 billion this year, according to the average estimate of analysts surveyed by Bloomberg.

CAVANAGH, SMITH

“Clearly this is a seminal moment for JPMorgan,” said Christopher Wheeler, an analyst at Mediobanca SpA, who has a neutral rating on the lender. “The problem is a number of the candidates to replace Jamie have left the bank in the last 18 months, so filling his shoes, which is a very big job, will not be straightforward.”

Mike Cavanagh, once seen as a potential successor to Mr. Dimon, left in March to become co-chief operating officer of private-equity firm Carlyle Group, marking the 11th departure among 14 top deputies identified in a 2008 Fortune magazine piece.

Gordon Smith, 55, who heads the consumer bank, would be the likely candidate if a temporary leader is needed, and chief operating officer Matt Zames, 43, is viewed as a “longer-term heir apparent,” said Charles Peabody, an analyst at Portales Partners.

A person familiar with the company's discussions said in March that other potential successors include Mary Erdoes, 46, CEO for asset management; Daniel Pinto, 51, who runs the corporate and investment bank; Doug Petno, CEO of the commercial bank; and chief financial officer Marianne Lake.

"GOOD PEOPLE'

Even after close colleagues left “I don't for a second believe the people who took their places are a step down,” said Michael Holland, chairman of Holland & Co., which oversees more than $4 billion in assets including JPMorgan shares. “Jamie Dimon attracts very good people,” he said. “He was tested by the fires of the financial crisis and showed what leadership can do.”

Questions about succession died down after Mr. Dimon survived the fallout from a trading loss of more than $6.2 billion in 2012 at the firm's chief investment office, and as he resolved multiple criminal and regulatory probes into the bank, said Mr. Cole, whose firm oversees $4 billion including JPMorgan shares.

“Somehow he came through it and he reasserted his leadership,” he said. “Now it kind of throws it back to the forefront, just like it would any company.”

About 27,000 cases of throat cancer are diagnosed annually with an estimated 6,100 deaths attributed to the disease each year in the U.S., according to the National Cancer Institute.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Mar 13

Conference

WOMEN to WATCH

InvestmentNews is honoring female financial advisers and industry executives who are distinguished leaders at their firms. These women have advanced the business of providing advice through their passion, creativity, inclusive approach and... Learn more

Featured video

INTV

Advisers beware: tax law has unintended consequences

Commission accounts could be preferable for some clients, and advisers could be incentivized to move from employee broker-dealers to independent channels.

Recommended Video

Path to growth

Latest news & opinion

Fidelity charging new fee on Vanguard assets held in 401(k) plans

The 0.05% fee is ostensibly a response to Vanguard's distribution model, but may also make the company's funds less attractive due to higher cost.

UBS adviser count continues to decline

Firm to merge U.S., global wealth management units on Feb. 1

TD Ameritrade launches all-night trading for ETFs

Twelve funds now can be traded after-hours, but the list will grow, company says.

Cutting through the red tape of adviser regulation is tricky

Don't expect a simple rollback of rules under the Trump administration in 2018 — instead, regulators are on pace to bolster financial adviser oversight.

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print