Two Cheers for JP Morgan’s “Clawbacks”
Harvard Business Review’s HBR Blog Network
July 13, 2012
Commentary by: Ben Heineman, Belfer Center senior fellow
Topic: Compensation and clawbacks
“JP Morgan Chase has used its internal compensation recovery policies to “clawback” two years of “total annual compensation” for London traders involved in what is now a $5.8 billion derivatives loss: Bruno Iksil (the “London Whale”); another trader, Javier Martin-Artajo; and their boss, Achilles Macris. All three have also left the firm with no severance pay.
So says Michael Cavanagh — who has been cleaning up the trading mess for JPM CEO Jamie Dimon — on the company’s quarterly earnings call. On the same call, Dimon himself announced that the global supervisor of the London office and head of the firm’s retired Chief Investment Office (CIO), Ina Drew, would voluntarily give up the ‘equivalent to the maximum clawback amount.’ Ms. Drew earned $15.5 million in 2011, including $7.5 million in stock awards, and also was due as much as $14.5 in severance according to this year’s Proxy Statement.”