One of the biggest questions surrounding JPMorgan, America’s largest and most prestigious bank, is succession planning: When will longtime CEO and banking czar Jamie Dimon step down?
He offered some hints last week, telling a JPMorgan investor call that “it’s not five years anymore,” but gave no details.
Thanks, Jamie. Fortunately, the Washington Post has its finger on what’s going on inside JPMorgan’s executive ranks and can report with a fair degree of confidence that Dimon intends to step down in two to three years, when he turns 70.
As for what he’ll do next, well, who knows.
The mere hint that Dimon would be leaving JP Morgan caused the market to react. The stock price fell about 4% and has still not fully recovered as of this writing. One of the reasons is the status Dimon has earned in the banking industry due to his success rate. Despite some incidents that have put him on the regulators’ radar, such as JP Morgan’s continued dealings with bad actors like the London Whales Bernie Madoff and Jeffrey Epstein, Dimon has been one of the most successful investment executives of our generation. Unlike other big banks, there have been no major scandals, at least not recently, and the stock price has risen 89% in the past five years.
“He works every day, seven days a week. He attends all the major meetings, he manages risk and he sells products,” one JPM executive said, describing Dimon’s work ethic. “He has no hobbies, he loves his job. He has no idea what he’ll do when he retires.”
Executives can’t imagine who could succeed them, and neither can most investors in their stock. They see the same thing most people inside the bank see: a strong CEO who has built a fortress-like balance sheet and business model and then entrusted the keys to the kingdom to the B-team.
Well, if that’s the current mood of Dimon watchers on Wall Street, that might be a bit tough as all the leading candidates are successful in their major business lines. Dimon has set up a three-way race with Marianne Lake, head of consumer banking, Jennifer Piepszak, co-head of JPM’s investment and commercial banking, and Troy Lohrbaugh, co-CEO of commercial and investment banking. Not a well-known face on Wall Street, Dimon is playing with the cards he’s got for now. We’re hearing the edge goes to Lake, who is also JPM’s CFO and is said to be the best at risk management.
As the years go by
So why do it now? Dimon has been saying his retirement date is five years away for as long as anyone can remember. Well, for some reason, apparently until last week, retirement was always five years away.
My sources offer a few reasons for Dimon’s mood swings. First, there’s the example of former Morgan Stanley CEO James Gorman. Gorman had a similarly impressive run as CEO, engineered a well-planned competition between the firm’s two top executives, and left the company in great shape. Gorman stepped down as CEO in January and announced Thursday he would step down as chairman at the end of the year.
Mr. Dimon was reportedly astonished by the succession-selection process: Handpicked favorites, Ted Pick, head of institutional risk management, and Andy Saperstein, head of securities, were under strict orders to just do their jobs and not lobby the board or Mr. Dimon. The results are clear.
Both did just that, but Pick came out the winner. Saperstein, a key member of Gorman’s inner circle, stayed with the firm because the process was smooth; there was no stampede that typically follows a leadership change. Morgan Stanley shares are up about 20% in the past year, roughly matching the S&P’s big gains.
Moreover, Dimon knows he’s done a good job running things well, and has seen his fair share of CEO types stay on past their prime. Remember when Dimon got thrown out the window at Citigroup in a management battle with Sandy Weill? He was a nomad for a few years, eventually landing at a regional bank, BankOne, which he folded into JPM in 2004 after it merged with Chemical Bank, which had merged with the old Chase Manhattan Corporation.
Dimon became CEO at the top of a Wall Street investment-banking empire that surpassed Citigroup Inc. in size and status (Weill is no longer with us, of course), and while Citigroup faced the ignominy of regulatory scandals, reckless risk-taking and multiple bailouts during the 2008 financial crisis, Dimon managed to steer JPMorgan out of the turmoil and achieve king-like status.
So what will Dimon do next? It depends on who you talk to. Some inside JPMorgan think he’ll teach at a university. Friends from his time at Citigroup tell me he hasn’t given up on running for national office. Remember when he said he’d be a better president than Trump because he was “smarter” and “tougher” than him? Dimon later apologized, but no one doubts he meant it.
A JPMorgan executive suggested, and I think the most likely scenario is that Dimon doesn’t stray too far. JPMorgan’s new mid-Manhattan headquarters is due to open within the next two years, and Dimon is eager to get construction underway. That’s why Dimon steps down as CEO and stays on as JPMorgan’s chairman, letting Lake & Co do the heavy lifting for a while while he sets strategic direction and does what he really loves: going to work every day.
