Slow-motion successions battle at Morgan’s homes

Jamie Dimon was once promoted as a potential US presidential candidate. When long-time JPMorgan Chase executive decided to oppose the White House in 2020, a shutdown could have been the limit of two terms.

Dimon has been in office since late 2005 and this week JPMorgan paved the way for a slow-motion battle to succeed him by announcing the retirement of one of its top lieutenants and the elevation of Marianne Lake and Jennifer Piepszak to run the bank’s vast consumer business.

Analysts interpreted the moves as a sign that JPMorgan could establish the appointment of the first female executive in its history. But few inside the bank expect the popular and frank Dimon, 65, to step down from his role soon.

JPMorgan’s board had told Dimon it would like it to continue for a “significant number of additional years,” the bank said. Internally, JPMorgan executives have been told this means five to seven more years, according to one person briefed on the matter.

This would extend the reign of Dimon, who suffered emergency heart surgery last year, in a third decade, or what would be the start of a sixth presidential term.

“The man has had a very long and serene tenure, apart from the London whale,” said John Coffee, a law professor at Columbia University, referring to the 2012 scandal when JPMorgan went losing $ 2.2 billion by secretly betting on credit derivatives.

“Everyone who was there when it started is no longer there.”

While this week’s changes at the top of JPMorgan do not herald the imminent departure of Dimon, they are occurring at the time of a broader change of guard to major U.S. lenders, some of whom have made more concerted efforts to start a new leadership.

Last fall, Mike Corbat, CEO of Citigroup, announced he would leave the post after eight years in office, sooner than many expected, and hand it over to Jane Fraser, who was born in Scotland.

On Thursday, rival Morgan Stanley threw a succession battle when chief executive James Gorman made a series of leadership changes, highlighting the promotion of two top MPs, Ted Pick and Andy Saperstein, to co-chair.

One of the templates for the eventual departure of Dimon, a throat cancer survivor, could be Disney’s Bob Iger, who last year stepped down as chief executive while remaining as president to manage the transition. This has been the practice in all recent successions of executive directors at JPMorgan, even when Dimon took over from William Harrison, Jr.

If Piepszak or Lake got the highest job, JPMorgan would become the second largest Wall Street lender run by a woman after elevation from Fraser to Citigroup.

Gordon Smith, who is replaced by Lake and Piepszak when he retires as chief consumer at the end of the year, said the couple had climbed to the top of the bench because they were strong leaders.

“The consumer business has more than 120,000 people and they have the ability to balance the IQ and equalizer for that job,” Smith told the Financial Times.

Both bankers have been with JPMorgan for more than two decades. Most recently, Lake has been in charge of JPMorgan’s consumer lending business, while Piepszak has been chief financial officer since 2019, when he replaced Lake.

Lake has had external suitors. According to a person familiar with the matter, he held talks about the job of executive director at Wells Fargo in 2019. A Wells Fargo spokeswoman declined to comment. The role was ultimately for another JPMorgan veteran, Charles Scharf.

Following Smith’s retirement, JPMorgan’s board sees investment banker Daniel Pinto, an Argentine, as the first executive in the line to take over from Dimon in the short term in case he fails to fulfill his role in case emergency. He will become the sole chairman and chief operating officer of the bank later this year.

Pinto, who has worked at the bank since 1983, was replaced as an executive alongside Smith last year when Dimon was operated on.

There are other internal candidates in JPMorgan, according to a person informed about the matter. The lender’s operating committee was expanded in September and two of those who joined, Teresa Heitsenrether, who oversees security services, and Troy Rohrbaugh, who leads the business operation, are seen as rising stars.

Mary Erdoes, in charge of JPMorgan’s $ 3.4 million asset and wealth management division, is another well-known competitor and has long been one of the bank’s holdings. highest paid executives, receiving more than $ 20 million a year.

Pick and Saperstein’s promotions at Morgan Stanley, along with two other major bank lieutenants, Jonathan Pruzan and Dan Simkowitz, set a four-way race to end the replacement of Gorman, an Australian who has led the bank since 2010.

Pick and Saperstein lead the equity and institutional management divisions, respectively, two Morgan Stanley business units that generate approximately 90% of the bank’s revenue.

Some within the bench refer to the group of contenders as the “four riders,” which reflect the exclusively male composition of the roster.

Gorman, 62, has told Morgan Stanley council he is committed to staying for at least three more years. However, he does not expect his term to be extended beyond the next five, according to one person informed of his plans.

JPMorgan and Morgan Stanley directors have little reason to rush their chief executives. Dimon and Gorman have enjoyed longer periods and more success than theirs European colleagues, who struggle with negative rates and a succession of scandals.

But in both cases, the two six-year-olds seem willing to extend their tenure at a time when the industry is facing new pressures from a younger generation of employees to move faster on environmental and sustainability issues. shocking views on how bankers should return to the office after the pandemic.

“Boards need to notice when a CEO no longer prioritizes what is important to the next generation of leaders. This is particularly important right now in financial services where there is a big demographic change, ”said Nell Minow, a governance expert at ValueEdge Advisors.

For Morgan Stanley, the lack of diversity among the current crop of contenders was evident, Minow said.

She added, “When you see a harvest of potential candidates like that, think, ‘Don’t you get a lot out of it? What do you miss?’