One of the most infuriatingly obvious and needless parts of The Dodd–Frank Wall Street Reform and Consumer Protection Act is a fun little nugget of Warrenista populist brilliance requiring financial firms to report CEO compensation in relation to what a median employee of said firm made over the same time period.
The rule is unapologetically designed to make finance “admit” that executives get paid way more than analysts fomenting an uninformed populist rage-out and creating more distrust of “Wall Street” or whatever that phrase means to Bernie Bros who live off Vanguard trust funds. That said, the rule is ingenious in that it yields what look like insane ratios that make people furious despite the gap being perfectly explainable.
Luckily, we already have the best example of this duality ready to go for your reading pleasure:
JPMorgan Chase & Co. Chief Executive Jamie Dimon received $28.3 million in total compensation in 2017, which the company said late Wednesday was 364 times the salary of a typical JPMorgan worker…
JPMorgan said its median employee earned $77,799 in 2017. Dimon’s compensation included a $1.5 million salary, $5 million in a cash award, and $23 million in performance share units.
“364 times more?!?! That’s criminal! Jamie Dimon, one man, makes that much more than an assistant branch manager in Tampa? This is why the 1 Percent rules us all as part of a secret cabal! We must make America fair again!”
If you voiced any of the above opinions in response to Jamie Dimon’s 2017 pay, please go ahead shut up forever.
Is the disparity of income between Jamie Dimon and this faceless median employee dizzying? Yes. Does this mathematically mean that Jamie makes as much in a day as the median employee makes in a year? You betcha. Is it unfair? Fuck NO.
Jamie Dimon makes 364 times than an assistant branch manager in Tampa because Jamie Dimon is at least 364 times more important to JPMorgan Chase than an assistant branch manager in Tampa. And that scale of importance slides in pretty sweet correlation when you go up or down the total comp ladder inside that company. Also, he’s JAMIE DIMON.
And please don’t even start with “A lot of people at that company could do that job, why pay him so much to do it?” horseshit. You know who couldn’t walk into Jamie’s office tomorrow and take over without the market putting JPM stock in an absolute fucking freefall? Someone currently making $78K a year at JPMorgan.
We know that we’re preaching mostly to the choir here, but this type of “data reporting” makes us nuts. Compensation in finance looks so unfair because it IS unfair. VERY. That’s the point. Jamie Dimon makes more because that’s how this shit works. He’s the longest serving-serving CEO of a major bank that also now happens to be America’s largest bank with a market cap of almost $389 billion, and under his leadership the bank’s public value has grown by more than 200%. Whoever is making $78K has none of those feathers in his or her cap, so they make 364 times less. That’s called math.
And he makes so much because the purpose of JPMorgan Chase is to make money, and (regardless of your moral view on “how”) it does. Jamie made almost $30 million last year and that might seem craven out of context but JPM pulls down about $25 billion a year in revenue. If the CEO of Chipotle was making $30 million we’d see your point…but not if he managed to sell $25 billion worth of diarrhea burritos. And we would also be cool with that person making about 400 times more than the cashier, right?
Still feeling so pissy?
Well, don’t blame us. Blame a batshit and utterly cheap political rule that forces you to look at the statistical equivalent of a Rorschach test purposefully rigged to look like this:
In a world filled to the brim with bullshit, let’s not step willfully into this dumbass puddle, shan’t we?
JPMorgan CEO Jamie Dimon makes 364 times typical worker [MarketWatch]