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  • J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

    J.P. Morgan's Executive Bonuses more Abusive than Merrill's
    by John Olagues - Truth in Options

    PLUNDER, v.
    To take the property of another without observing the decent and customary reticences of theft. To effect a change of ownership with the candid concomitance of a brass band. To wrest the wealth of A from B and leave C lamenting a vanishing opportunity.
    - Ambrose Bierce, Devil’s Dictionary

    This article is about how J.P. Morgan's executives received large bonuses in the form of Stock Appreciation Rights (SARs) and Restricted Stock Units in lieu of cash payments. SARs are very similar to employee stock options and Restricted Stock Units are very similar to Restricted Stock.

    These SARs were granted on January 20, 2009, the day that the J.P.Morgan stock reached its lowest in five years. The stock quickly rebounded as illustrated in the graph below. The arrow indicates the day and the price of the stock when the grant was made.

    On January 22, 2008 we see a repetition of the grants of SARs with the stock hitting a low point followed by a substantial rebound in the next days.

    As readers will recall, J.P. Morgan received the first large bail-out from the New York FED of $55 Billion, guaranteed by Bear Stearns' worthless assets, to prop up its own liquidity position and buy Bear Stearns stock.

    J.P. Morgan also recently received another $25 Billion in TARP payments.

    Let's examine the size of the bonuses of the top 15 executives, at J.P. Morgan, that were granted on January, 20, 2009 and reported two days later.



    See: http://www.secform4.com/insider-trading/19617.htm

    Stock Appreciation Rights Granted

    SARs Amounts--------Name of---------Exercise--------Value 2/4/09
    Granted---------------Grantee----------Price

    700,000 _________ Winters _______19.49________ $11,300,000
    700,000 _________ Black__________ " _______ $11,300,000
    500,000 _________ Staley_________ " ________ $8,100,000
    300,000 _________ Scharf_________ " _______ $4,890,000
    250,000_________ Drew___________ " _______ $4,075,000
    200,000_________ Miller __________ " _______ $3,260,000
    200,000 _________ Rauchenberger __" _______ $3,260,000
    200,000 _________ Smith _________ "_______ $3,260,000
    200,000 _________ Zubrow ________ "_______ $3,260,000
    200,000 _________ Bisignano _______" _______ $3,260,000
    200,000 _________ Mandelbaum _____"_______ $3,260,000
    200,000 _________ Cavanaugh ______" _______ $3,260,000
    200,000 _________ Cutler __________" _______ $3,260,000
    200,000 _________ Maclin _________ " _______ $3,260,000
    100,000 _________ Daley __________" _______ $1,630,000
    ----------------------------------------------------------------------------------------
    Total value (2/4/09) of SARs Granted = $70,905,000
    Restricted Stock Units Granted

    RSUs Amounts-----------Name of-------------Market Value------SARS Value
    Granted-------------------Grantee-------------of stock 2/4/09

    115,474 ____________Staley __________24.10 __________$2,782,923
    102,644 ____________ Miller____________ "____________ $2,473,720
    102,644 ____________ Scharf___________ " ___________ $2,473,720
    102,644 ____________ Smith____________ "___________ $2,473,720
    102,644 ____________ Bisignano _________" ___________ $2,473,720
    102,644 ____________Cavanaugh ________ " ___________ $2,473,720
    102,644 ____________Drew_____________ " ___________ $2,473,720
    102,644 ____________Maclin____________ " ___________ $2,473,720
    89,813 _____________Zubrow___________ " ___________ $2,164,493
    89,813 _____________Cutler____________ " ___________ $2,164,493
    59,662 _____________Daley_____________ " ___________ $1,364,542
    35,926 _____________Rauchenberger_____ " ___________ __ $865,816
    --------------------------------------------------------------------------------------------------
    Total value (2/4/09) of RSUs Granted = $26,600,000
    Total Value of equity grants to top 15 executives = $97,505,000

    These totals are far more than the top executives of Merrill Lynch were to receive as their year end bonuses in cash and equity for which the New York Attorney General is supposedly investigating for criminal wrong doing.

    Merrill CEO, Thain was granting himself just $10 million whereas at least three Morgan executives exceeded that in equity compensation alone.

    An interesting question arises from an examination of the fact that for the past two years grants were made on or around January 20. It just happened that the stock dropped prior to the grant and moved upward immediately after the grants.Its hard to accept the idea that those executives just got very lucky for two years in a row. Yes, I am suggestion collusion in the manipulation of the stock to accommodate the grants of options etc.

    Some call this spring-loading the options grants.

    Is J.P. Morgan immune from investigation?

    Now what we find is that bankers' errand boy extraordinaire CEO, James Dimon, is popping off about the ridiculous idea that J.P. Morgan does not need further bail-out money after Morgan grabbed $55 Billion in the Bear Sterns deal and another $25 Billion of TARP money in banker welfare payments.

    See: http://www.bloomberg.com/apps/news?p...d=azVLk.22AkLI

    If they do not need the bail-outs, let Morgan and Goldman return the welfare payments.

    Perhaps also an explanation is in order of why James Dimon is not prosecuted for violations of Title 18 Section 208 U.S.C. in his role as Director of the New York Federal Bank in approving the J.P. Morgan/Bear Stearns deal.

    Neither J.P. Morgan, Goldman Sachs or any other bank will return the TARP monies because the market values of the Preferred Stock and Warrants packages that the U.S. taxpayer received were 50% lower than what the taxpayers were forced to pay. And the market values of those packages have dropped considerably in every case since the welfare payments to Goldman, Morgan , Bank of America etc. were made.

    In the case of Bank of America and Merrill, the warrants purchased by the Treasury are down over 92% since the bail-out.
    - John Olagues
    iTulip Select: The Investment Thesis for the Next Cycle™
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    Last edited by FRED; 02-06-09, 11:36 AM.
    Ed.

  • #2
    Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

    Originally posted by FRED View Post
    An interesting question arises from an examination of the fact that for the past two years grants were made on or around January 20. It just happened that the stock dropped prior to the grant and moved upward immediately after the grants.Its hard to accept the idea that those executives just got very lucky for two years in a row. Yes, I am suggestion collusion in the manipulation of the stock to accommodate the grants of options etc.

    Some call this spring-loading the options grants.
    Its ok, I'm sure the SEC is on it. They are really good at catching crooked insiders in the financial industry.

    Comment


    • #3
      Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

      Originally posted by rachits View Post
      Its ok, I'm sure the SEC is on it. They are really good at catching crooked insiders in the financial industry.
      Are you talking about these same SEC executives

      http://www.youtube.com/watch?v=FOKSkaQoF_I

      http://www.youtube.com/watch?v=RZtvQbp2ixc


      Comment


      • #4
        Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

        Originally posted by vdhulla View Post
        We can only hope that these executives' sense of shame will overcome more base motivations and renounce and return these amenities. Perhaps the SEC folks before the congressional hearing will redeem themselves and investigate JPM's mysterious stock hiccups.

        I'm sure the SEC folks sense of shame will stimulate them to heights of investigative vigor and prowess to atone for their sin of undue diligence. Though...I can't recall any tears, mea culpas. or sympatico disgorging coming forth from the bowels of these vestal virgins guarding the Temple of Integrity, Hearth, and Book Cooking on Profit At Cost Street...which the participants of that miracle one day rally failed to do and were richly reward for successfully doing so. van

        Comment


        • #5
          Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

          FRED, FRED, FRED:

          Don't be picky, picky, picky. We are in an EMERGENCY !!! We can't afford to look back while jobs are being lost - and yachts are being lost, too !!!
          We MUST pass more stimulus, and fast ! :rolleyes:

          Comment


          • #6
            Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

            its not just the slimeballs on Wall Street.

            in the bankrupt state of California, we also have morally bankrupt government leaders who think nothing of holding up disabled and blind people's welfare checks while they can spend, spend, spend on their office furniture:

            http://www.sfgate.com/cgi-bin/articl...BADA15NG23.DTL

            pretty sickening

            Comment


            • #7
              Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

              Personally, I have been intrigued by the, (shall we describe it as deathly?), silence - about the why's and wherefore's of the sudden change of status from "investment banks" to ordinary banks.

              As I understand it that decision was driven by the desperate need to stop them from leveraging at rates suggested as being in excess of 25 and thus to make a start towards bringing them under control.

              Perhaps we should assume the silence is all about the fact that the self same individuals had turned a blind eye in the first place.:rolleyes::eek:.

              But sooner or later, someone has surely to step up to the plate to reveal who made the running on both sides of that decision.

              Comment


              • #8
                Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

                Not to worry. As capitalist free-market firms they are allocating resources perfectly and rationally at every turn. In this, the best of all possible worlds.

                How can you still not understand this Fred?

                Comment


                • #9
                  Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

                  Originally posted by WDCRob View Post
                  Not to worry. As capitalist free-market firms they are allocating resources perfectly and rationally at every turn. In this, the best of all possible worlds.

                  How can you still not understand this Fred?
                  Excuse my sceptism, but just how much capital, as against every other form of money, have they issued over, say, the last decade? In what proportion?

                  Comment


                  • #10
                    Re: J.P. Morgan's Excutives Bonuses more Abusive than Merrill's

                    Originally posted by rachits View Post
                    Its ok, I'm sure the SEC is on it. They are really good at catching crooked insiders in the financial industry.

                    That was funny:eek:

                    Comment

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