(Bloomberg) -- JPMorgan Chase will let Jamie Dimon collect about $37 million in stock options created during the financial crisis, as the board stands by its leader after risk-management lapses and billions of dollars in legal settlements.
JPMorgan gave the chief executive officer 2 million stock- appreciation rights in January 2008, saying they would be available in five years if the board still deemed it appropriate. Last year, the firm delayed vesting by 18 months to address flawed internal controls exposed by botched derivatives bets. JPMorgan resolved a variety of probes in the months that followed.
The board decided not to further defer the vesting of these options at the July 2014 meeting, Joe Evangelisti, a spokesman for the New York-based bank, said today after the vesting of the grant was disclosed in a regulatory filing.
Since the packages creation, JPMorgan has become the nations largest lender, acquiring Bears Stearns and Washington Mutuals bank units at the height of the crisis. As Dimon, 58, navigated the regulatory setbacks, the board signaled support for his work as CEO and chairman, boosting his pay 74% to $20 million in January.
The options have a $39.83 strike price and expire in January 2018. JPMorgans stock closed today at $57.86, giving the award a value of about $37 million, according to data compiled by Bloomberg.
Jamie does not plan to exercise the options at this time, Evangelisti said. Jamie has never sold any JPM stock except to cover the cost of an options exercise and as part of required income-tax liability attributable to vesting.
The bank cited the importance of Mr. Dimons continuing, long-term stewardship in realizing the companys potential as a premier financial institution when it announced the bonus in 2008. It was the first options package Dimon received after becoming CEO in 2006, the New York-based firm said at the time. Dimon could have gotten all or none of the 2 million options depending on his performance, according to the 2008 filing.
From the start of 2008 through last week, JPMorgan shares returned 51%, including dividends, while U.S. bank indexes declined. Citigroups return was negative 83%, while Bank of Americas was negative 59%. Wells Fargo topped JPMorgan with a return of more than 100%.
JPMorgan was alone among the six largest U.S. lenders in avoiding a quarterly loss during the crisis. In the years that followed, the firm faced probes into mortgage-bond sales, energy trading and oversight of services provided to Ponzi scheme operator Bernard Madoff, culminating in $23 billion in settlements last year. Its still contending with investigations into overseas hiring practices and rate-rigging.
As the bonus deadline arrived last year, the board said Dimon bore some responsibility for oversight of a trader known as the London Whale, whose derivatives bets caused losses exceeding $6.2 billion in 2012.
Dimon overhauled the unit where the losses occurred and assigned at least 5,000 employees to bolster controls companywide. He also struck a more conciliatory tone, saying in his annual letter that managers had a tin ear when dealing with regulators and would be better listeners.
When granting his raise the January, the bank cited steps Dimon had taken to resolve the firms regulatory issues. That angered Manhattan U.S. Attorney Preet Bharara, who subsequently increased pressure on banks including Paris-based BNP Paribas SA, people with knowledge of the matter said in June.
Earlier this month, Dimon disclosed that he was diagnosed with throat cancer. He has said he intends to work during his eight-week treatment and that Lee Raymond, the companys lead director, is available if managers need guidance while Dimon is unavailable.
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