Preliminary Proxy Statement




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
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JPMorgan Chase & Co.
270 Park Avenue
New York, New York 10017-2070


April __, 2013
Dear fellow shareholders:
We are pleased to invite you to the annual meeting of shareholders to be held on May 21, 2013 , at our Highland Oaks Campus in Tampa, Florida. As we have done in the past, in addition to considering the matters described in the proxy statement, we will review major developments since our last shareholders’ meeting.
We hope that you will attend the meeting in person. We strongly encourage you to designate the proxies named on the proxy card to vote your shares even if you are planning to come. This will ensure that your common stock is represented at the meeting. The proxy statement explains more about proxy voting. Please read it carefully. We look forward to your participation.

Sincerely,



James Dimon
Chairman and Chief Executive Officer



























Notice of 2013 Annual Meeting
of Shareholders and Proxy Statement
 
 
 
 
Date:
  
Tuesday, May 21, 2013
Time:
  
10:00 am
Place:
  
JPMorgan Chase Highland Oaks Campus
10420 Highland Manor Drive, Building 2
Tampa, FL 33610

Matters to be voted on:
Election of directors
Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2013
Advisory resolution to approve executive compensation
Amendment to the Firm’s Restated Certificate of Incorporation to authorize shareholder action by written consent
Reapproval of the Key Executive Performance Plan
Shareholder proposals, if they are introduced at the meeting
Any other matters that may properly be brought before the meeting
By order of the Board of Directors
Anthony J. Horan
Secretary
April __, 2013

Please vote promptly.
If you hold your shares in street name and do not provide voting instructions, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. See “How votes are counted” at page 52 .
We sent shareholders of record at the close of business on March 22, 2013 , a Notice of Internet Availability of Proxy Materials on or about April __, 2013 . Instructions on how to receive a printed copy of our proxy materials are included in the notice, as well as in this attached Proxy Statement.
Our 2013 Proxy Statement and Annual Report for the year ended December 31, 2012 , are available free of charge on our Website at http://investor.shareholder.com/jpmorganchase/annual.cfm.
If you plan to attend the meeting in person , you will be required to present a valid form of government-issued photo identification, such as a driver’s license, and proof of ownership as of our record date March 22, 2013 . See “Attending the annual meeting” at page 53 .





Contents
 
Page
 
Proposal 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proposal 2:
Proposal 3:
Proposal 4:
Proposal 5:
Proposals 6-9:
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
Appendix F:
Appendix G:




Table of Contents

2013 Proxy Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all the information you should consider, and you should read the entire proxy statement carefully before voting.
Annual Meeting of Shareholders
Time and Date:
10:00 am Eastern Daylight Time, May 21, 2013

Place:
JPMorgan Chase Highland Oaks Campus
10420 Highland Manor Drive, Building 2
Tampa, Florida 33610
 
 
Record Date:
March 22, 2013
Voting and Attendance at Meeting
Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote on each matter to be voted on. Voting may be done over the Internet, by telephone, by completing and mailing the proxy card, or in person at the annual meeting. Additional information is provided under “General information about the meeting” at page 52.
If you plan to attend the meeting in person, you will be required to present a valid form of government-issued photo identification, such as a driver’s license, and proof of ownership as of our record date March 22, 2013. See “Attending the annual meeting” at page 53.
 
Matters to be Voted on:
 
 
 
 
Management Proposals
 
 
 
 
 
 
 
 
The Board of Directors recommends you vote For each director nominee and for the following proposals (for more information see page referenced):
 
 
1. Election of Directors
 
page 1
 
4. Amendment to Certificate of Incorporation authorizing shareholder action by written consent
 
page 41
 
 
 
 
 
 
 
 
 
 
 
2. Ratification of PricewaterhouseCoopers LLP as the Firm’s independent registered public accounting firm
 
page 40
 
5. Reapproval of the Key Executive Performance Plan
 
page 43
 
 
 
 
 
 
 
 
 
 
 
3. Advisory resolution to approve executive compensation

 
page 41
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholder Proposals  (if they are introduced at the meeting)
 

The Board of Directors recommends you vote Against each of the following shareholder proposals  (for more information see page referenced):
 
 
6. Require separation of chairman and CEO


 
page 44
 
8. Adopt procedures to avoid holding or recommending investments that contribute to human rights violations
 
page 48
 
 
 
 
 
 
 
 
 
 
 
7. Require executives to retain significant stock until reaching normal retirement age
 
page 46
 
9. Disclose Firm payments used directly or indirectly for lobbying, including specific amounts and recipients’ names
 
page 50
 
 
 
 
 
 
 
 
 
 







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Election of Directors
The Board has nominated 11 directors: the CEO and 10 other serving directors, all of whom are independent.
Nominee and Principal Occupation
 
Nominee and Principal Occupation
James A. Bell
Retired Executive Vice President of The Boeing Company
Director since 2011

 
Timothy P. Flynn
Retired Chairman of KPMG International
Director since May 2012
 
 
 
Crandall C. Bowles
Chairman of Springs Industries, Inc.
Director since 2006
 
Ellen V. Futter
President and Trustee of the American Museum of Natural History
Director since 2001 and Director of J.P. Morgan & Co. Incorporated from 1997 to 2000
 
 
 
Stephen B. Burke
Chief Executive Officer of NBCUniversal, LLC and Executive Vice President of Comcast Corporation
Director since 2004 and Director of Bank One Corporation from 2003 to 2004
 
Laban P. Jackson, Jr.
Chairman and Chief Executive Officer of Clear Creek Properties, Inc.
Director since 2004 and Director of Bank One Corporation from 1993 to 2004
 
 
 
David M. Cote
Chairman and Chief Executive Officer of Honeywell International Inc.
Director since 2007
 
Lee R. Raymond (Presiding Director)
Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation
Director since 2001 and Director of J.P. Morgan & Co. Incorporated from 1987 to 2000
 
 
 
James S. Crown
President of Henry Crown and Company
Director since 2004 and Director of Bank One Corporation from 1991 to 2004

 
William C. Weldon
Retired Chairman and Chief Executive Officer of Johnson & Johnson
Director since 2005
 
 
 
James Dimon
Chairman and Chief Executive Officer of
JPMorgan Chase & Co.
Director since 2004 and Chairman of the Board of Bank One Corporation from 2000 to 2004

 

 
Corporate Governance
The Board strongly endorses the continued role of Jamie Dimon as both Chairman and CEO under the Board oversight structure led by our Presiding Director. The Firm has had strong performance through the cycle since Mr. Dimon became Chairman and CEO, and during a time when many other financial institutions with independent Chairs experienced great difficulty. The strength and independence of the Board’s oversight has been well demonstrated by the actions taken and in process following the events that developed in the Chief Investment Office in 2012.
Corporate governance is a continuing focus at JPMorgan Chase, starting with our Board of Directors and extending throughout the Firm.
Independence: Every director other than the CEO (who serves as Chairman) is independent, and independent directors comprise 100% of the following principal Board committees.
Audit Committee
 
Public Responsibility Committee
Compensation & Management Committee
 
Risk Policy Committee
Corporate Governance & Nominating Committee
 
 
Presiding Director: The Firm’s Presiding Director is appointed annually by and from among the independent directors, approves Board meeting agendas and schedules, may add agenda items, approves Board meeting materials for distribution to the Board, facilitates communication between the Chairman and CEO and the

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independent directors, as appropriate, and is available for consultation and communication with major shareholders where appropriate.
Executive sessions: Independent directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.
Strong committee structure: All chairs of principal committees are independent, approve agendas and material for meetings and work directly with senior management responsible for matters within the scope of their responsibilities.
Resources: The Board has complete access to management and the Board and Board Committees can, if they wish to do so, seek legal or other expert advice from sources independent of management.
Share retention: For so long as they serve, the directors pledge they will retain all shares of the Firm’s common stock purchased on the open market or received pursuant to their service as a Board member.
Majority voting: Directors are elected annually (there is not a “staggered” board), with majority voting in uncontested elections.
Shareholder rights: Shareholders holding at least 20% of the outstanding shares of common stock (net of hedges) can call a special meeting. The Board is proposing for shareholder approval an amendment to the Firm’s Certificate of Incorporation that would permit shareholders to act by written consent on terms intended to be substantially similar to the terms applicable to call special meetings.
Additional information is provided under Corporate governance at page 7 and in response to Proposal 6 to require separation of Chairman and CEO.
 
Compensation Principles and 2012 Executive Compensation
Compensation determinations are guided by the JPMorgan Chase Compensation Principles and Practices. As described starting at page 18 and in Appendix C at page 59 , these principles include:
Maintaining strong governance: Independent Board oversight of the Firm’s compensation principles and practices and their implementation
Attracting and retaining top talent: A recognition that competitive and reasonable compensation helps attract and retain the high quality people necessary to grow and sustain our businesses
Tying compensation to performance:
A focus on the qualitative as well as the quantitative performance of the individual employee, the relevant line of business or function and the Firm as a whole
A focus on multi-year, long-term, risk-adjusted performance and rewarding behavior that generates sustained value for the Firm through business cycles
Performance assessments that are broad-based and balanced, including an emphasis on teamwork and a “shared success” culture
Aligning with shareholder interests:
A significant stock component (with deferred vesting) for shareholder alignment and retention of top talent
Very strict limits or prohibitions on executive perquisites, special executive retirement severance plans, and no golden parachutes
Integrating risk and compensation:
Input into compensation determinations by risk and control functions
Although awards are made with the expectation that they will vest in accordance with their terms, all awards contain strong recovery provisions, and additional risk-related recovery provisions apply to the Operating Committee, the Firm’s most senior management group, and to a group of senior employees we refer to as Tier 1 employees with primary responsibility for risk positions and risk management
Shares received by Operating Committee members are subject to robust retention requirements and a prohibition on hedging

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2012 Performance Highlights of the Firm 1  
During 2012, the Firm continued its strong performance, as reflected in:
Third consecutive year of record net earnings and 15% ROTCE; ROE of 11%
Record net earnings of $21.3 billion, up 12%; Record EPS of $5.20 per share, up 16%
Common share price increased by 32% in 2012; total return with dividends of 36%
Basel I Tier I Common ratio of 11.0% and Tier 1 Capital ratio of 12.6% at year end
Provided credit and raised capital of over $1.8 trillion for its commercial and consumer clients, including $20 billion of credit provided to U.S. small businesses, up 18% over the prior year
Remained committed to helping homeowners and preventing foreclosures
Continued growth of the franchise, and substantial investment in the future
The foregoing results include the effect of significant losses incurred in 2012 in the Synthetic Credit Portfolio within the Firm’s Chief Investment Office. For more information about the Firm’s 2012 performance, see pages 16–17 and Appendix E at page 62 .
2012 Compensation for Mr. Dimon: As announced on January 16, 2013, the Board approved 2012 compensation for Mr. Dimon in the amount of $11.5 million, down 50% from the prior year. Compensation included salary of $1.5 million (flat with the prior year) and incentive compensation of $10 million, all in the form of RSUs (down 53.5% from the prior year). The RSUs vest over three years, half after two years and the other half after three years. The Board also deferred, for a period up to July 22, 2014, vesting of options in the form of share settled stock appreciation rights it had granted Mr. Dimon in January 2008 and which had been scheduled to vest in January 2013.
 

_______________________
1
For notes on non-GAAP and other financial measures, including managed basis reporting relating to the Firm’s business segments, see Appendix E at page 68 .
 
2012 Compensation for Named Executive Officers
The following table shows annual salary paid and incentive compensation awarded with respect to 2012 for the Named Executive Officers. This table differs from the Summary Compensation Table required by the SEC at page 30 , and is not a substitute for such information. For more information about the Firm’s compensation of its Named Executive Officers, see the Compensation Discussion and Analysis at page 16 , and Appendix D at page 61 .
2012 Salary and incentive compensation
Annual compensation
 
 
        Salary ($)

 
Incentive compensation
 
 
Name and principal position
 
     Cash ($)

 
        RSUs ($)

 
         SARs ($)

 
  Total ($)

James Dimon
 
$
1,500,000

 
$
0

 
$
10,000,000

 
$
0

 
$
11,500,000

Chairman and CEO
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 


Douglas L. Braunstein
 
750,000

 
2,125,000

 
2,125,000

 
0

 
5,000,000

Vice Chairman (Former CFO)
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 

Mary Callahan Erdoes
 
750,000

 
4,900,000

 
7,350,000

 
2,000,000

 
15,000,000

CEO Asset Management
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 


Daniel E. Pinto 1
 
750,000

 
8,125,000

 
7,125,000

 
1,000,000

 
17,000,000

Co-CEO Corporate & Investment Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Matthew E. Zames
 
750,000

 
6,100,000

 
9,150,000

 
1,000,000

 
17,000,000

Co-Chief Operating Officer
 
 
 
 
 
 
 
 
 
 
1     For Mr. Pinto, the terms and composition of compensation are structured to reflect applicable United Kingdom standards as described at page 23 .

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Proxy statement
Your vote is very important. For this reason, the Board of Directors of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) is requesting that you allow your common stock to be represented at the annual meeting by the proxies named on the proxy card. This proxy statement is being sent or made available to you in connection with this request and has been prepared for the Board by our management. The proxy statement is being sent and made available to our shareholders on or about April __, 2013 .
 
Proposal 1 Election of directors
Nominees
Our Board of Directors has nominated 11 directors for election at this annual meeting to hold office until the next annual meeting and the election of their successors. All of the nominees are currently directors. Each has agreed to be named in this proxy statement and to serve if elected. All of the nominees are expected to attend the May 21, 2013 , annual meeting.
Although we know of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxies intend to vote your common stock for any substitute nominee proposed by the Board of Directors. The Board may also choose to reduce the number of directors to be elected, as permitted by our By-laws.
Nomination process
The Board’s Corporate Governance & Nominating Committee (the “Governance Committee”) is responsible for evaluating and recommending to the Board proposed nominees for election to the Board of Directors. The Governance Committee, in consultation with the Chief Executive Officer, periodically reviews the criteria for composition of the Board and evaluates potential new candidates for Board membership. The Governance Committee then makes recommendations to the Board. The Governance Committee also takes into account criteria applicable to Board committees.
As stated in the Corporate Governance Principles of the Board (the “Corporate Governance Principles”), in determining Board nominees, the Board wishes to balance the needs for professional knowledge, business expertise, varied industry knowledge, financial expertise, and CEO-level management experience. Following these principles, the Board seeks to select nominees who combine leadership and business management experience, experience in disciplines relevant to the Firm and its businesses, and personal qualities reflecting integrity, judgment, achievement, effectiveness, and willingness to appropriately challenge management.
The Board strives to ensure diversity of representation among its members. Of the 11 director nominees, two are women and one is African-American. Increasing diversity is a priority, and when considering prospects for possible recommendation to the Board, the Governance Committee reviews available information about the experience, qualifications, attributes and skills of prospects, as well as their gender, race and ethnicity.
The Governance Committee will consider director candidates recommended for consideration by members of the Board, by management and by shareholders, and will seek diverse slates when considering candidates. Shareholders wishing to recommend to the Governance Committee a candidate for director should write to the Secretary at: JPMorgan Chase & Co., Office of the Secretary, 270 Park Avenue, New York, New York 10017.
It is the policy of the Governance Committee that candidates recommended by shareholders will be considered in the same manner as other candidates and there are no additional procedures a shareholder must undertake in order for the Governance Committee to consider such shareholder recommendations.
Information about the nominees
Boards act collectively and, together, the members of the Board provide the Firm with a breadth of demonstrated senior leadership and management experience in large complex organizations, global marketing, services and operations, regulated industries, wholesale and retail businesses, financial controls and reporting, compensation, governance, management succession, strategic planning and risk management. The director nominees bring broad and varied skills and knowledge from positions in global businesses, not-for-profit organizations and government, and diverse perspectives from a broad spectrum of industries, community activities and other factors. Each possesses the personal characteristics needed for the responsibilities of a director: each has demonstrated significant achievement in his or her endeavors, can work cooperatively and productively in the interest of all

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shareholders, possesses high character and integrity, devotes the necessary time to discharge his or her duties, and, for non-management directors, is independent.
The following provides biographical information regarding each of the nominees, including their specific business experience, qualifications, attributes and skills that the Board considered, in addition to their prior service on the Board, when it determined to nominate them.
Unless stated otherwise, all of the nominees have been continuously employed by their present employers for more than five years. The age indicated in each nominee’s biography is as of May 21, 2013 , and all other biographical information is as of the date of this proxy statement. Our directors are involved in various charitable and community activities and we have listed a number of these below.


 
 
 
 
James A. Bell, 64
Retired Executive Vice President of The Boeing Company, aerospace
Director since 2011
 
 
 
 
 
 
 
 
Mr. Bell was an Executive Vice President of The Boeing Company, the world’s largest aerospace company, from 2003 until his retirement in April 2012. He had been Corporate President from June 2008 until February 2012 and was Chief Financial Officer from November 2003 until February 2012. While Chief Financial Officer, he oversaw two key Boeing businesses, Boeing Capital Corporation, the company’s customer-financing subsidiary, and Boeing Shared Services, an 8,000-person, multi-billion dollar business unit that provides common internal services across Boeing’s global enterprise. He is a director of Dow Chemical Company (since 2005).
Prior to being named Chief Financial Officer in 2003, Mr. Bell held the position of Senior Vice President of Finance and Corporate Controller from 2000 and was Vice President of contracts and pricing for Boeing Space and Communications from 1996 to 2000. Before becoming Vice President at the operating group level in 1996, Mr. Bell served as director of business management of the Space Station Electric Power System at the Boeing Rocketdyne unit. Mr. Bell began his career with Rockwell in 1972.
Mr. Bell graduated California State University at Los Angeles with a degree in accounting. He is a member of the board of directors of the Chicago Urban League and the Chicago Economic Club.
Mr. Bell has had global business and leadership experience overseeing business performance and strategic growth initiatives at Boeing. His finance and accounting expertise included experience with and direct involvement and supervision in the preparation of financial statements and risk management. As CFO, he was responsible for overall financial management of the company, its financial reporting and transparency, and for multiple corporate functions including Controller, Treasury, long-range planning and corporate and strategic development. In his position as Senior Vice President of Finance and Corporate Controller he served as the company’s principal interface with the board’s audit committee.
 

 
 
 
 
Crandall C. Bowles, 65
Chairman of Springs Industries, Inc., window fashions
Director since 2006
 
 
 
 
 
 
 
 
Ms. Bowles has been Chairman of Springs Industries, Inc., a manufacturer of window products for the home, since 1998 and a member of its board since 1978. From 1998 until 2006, she was also Chief Executive Officer of Springs Industries, Inc. Subsequent to a spinoff and merger in 2006, she was Co-Chairman and Co-CEO of Springs Global Participacoes S.A., a textile home furnishings company based in Brazil, until July 2007. Ms. Bowles is a director of Deere & Company (since 1999 and previously from 1990 to 1994). She previously served as a director of Sara Lee Corporation (2008-2012) and of Wachovia Corporation (1991–1996).

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Ms. Bowles graduated from Wellesley College in 1969 and earned an MBA from Columbia University in 1973. She is a trustee of the Brookings Institution and is on the governing boards of the Packard Center at Johns Hopkins and The Wilderness Society.
Ms. Bowles has extensive experience managing large complex business organizations at Springs Industries, Inc. and Springs Global Participacoes S.A. At those companies, and through her current and prior service on other public company boards, she has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation, international business, and sales and marketing of consumer products and services. Her philanthropic activities give her valuable perspective on important societal and economic issues relevant to the Firm’s business.
 
 
 
 
 
Stephen B. Burke, 54
Chief Executive Officer of NBCUniversal, LLC and Executive Vice President of Comcast Corporation, television and entertainment
Director since 2004 and Director of Bank One Corporation from 2003 to 2004
 
 
 
 
Mr. Burke has been Chief Executive Officer of NBCUniversal, LLC and Executive Vice President of Comcast Corporation since January 2011. He had been Chief Operating Officer of Comcast Corporation, one of the nation’s leading providers of entertainment, information and communication products and services, from 2004 until 2011, and was President of Comcast Cable Communications, Inc. from 1998 until January 2010. Before joining Comcast, he served with The Walt Disney Company as President of ABC Broadcasting. Mr. Burke joined The Walt Disney Company in January 1986, where he helped to develop and found The Disney Store and helped to lead a comprehensive restructuring effort of Euro Disney S.A. Mr. Burke is a director of Berkshire Hathaway Inc. (since 2009).
Mr. Burke graduated from Colgate University in 1980 and received an MBA from Harvard Business School in 1982. He is Chairman of The Children’s Hospital of Philadelphia.
Mr. Burke’s roles at Comcast, ABC Broadcasting, and Euro Disney, have given him broad exposure to the challenges associated with managing a large and diverse business. In those roles he has dealt with a variety of issues including audit and financial reporting, risk management, executive compensation, sales and marketing, and technology and operations. In addition, Comcast and ABC Broadcasting have provided him with experience working in regulated industries and Euro Disney has given him international business experience.
 
 
 
 
 
David M. Cote, 60
Chairman and Chief Executive Officer of Honeywell International Inc., diversified technology and manufacturing
Director since 2007
 
 
 
 
Mr. Cote is Chairman and Chief Executive Officer of Honeywell International Inc., a diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; turbochargers; and specialty materials. He was elected President and Chief Executive Officer in February 2002, and was named Chairman of the Board in July 2002. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., which he joined in 1999 after a 25 year career with General Electric. Mr. Cote is a director of Honeywell International Inc. (since 2002).
Mr. Cote graduated from the University of New Hampshire in 1976. In 2010, he was named by President Obama to serve on the bipartisan National Commission on Fiscal Responsibility and Reform. Mr. Cote was named co-chair of the U.S.-India CEO Forum by President Obama in 2009, and has served on the Forum since July 2005. Mr. Cote is a member of The Business Roundtable and serves on an advisory panel to Kohlberg Kravis Roberts & Co.

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At Honeywell and TRW, Mr. Cote gained experience dealing with a variety of issues relevant to the Firm’s business, including audit and financial reporting, risk management, executive compensation, sales and marketing of industrial and consumer goods and services, and technology matters. He also has extensive experience in international business issues and public policy matters. His record of public service further enhances his value to the Board.
 
 
 
 
 
James S. Crown, 59
President of Henry Crown and Company, diversified investments
Director since 2004 and Director of Bank One Corporation from 1991 to 2004
 
 
 
 
 
 
 
 
Mr. Crown joined Henry Crown and Company, a privately owned investment company which invests in public and private securities, real estate and operating companies, in 1985 as Vice President and became President in 2002. Mr. Crown is a director of General Dynamics Corporation (since 1987). He is also a director of JPMorgan Chase Bank, N.A., a wholly-owned subsidiary of the Firm (since 2010). He previously served as a director of Sara Lee Corporation (1998–2012).
Mr. Crown graduated from Hampshire College in 1976 and received his law degree from Stanford University Law School in 1980. Following law school, Mr. Crown joined Salomon Brothers Inc. and became a vice president of the Capital Markets Service Group in 1983. In 1985 he joined his family’s investment firm. He is a Trustee of the University of Chicago Medical Center, the Museum of Science and Industry, The Aspen Institute, the University of Chicago, and the Chicago Symphony Orchestra. He is a member of the American Academy of Arts and Sciences.
Mr. Crown’s position with Henry Crown and Company and his service on other public company boards have given him exposure to many issues encountered by the Firm’s Board, including audit and financial reporting, investment management, risk management, and executive compensation. His legal training gives him enhanced perspective on legal and regulatory issues. He is experienced in investment banking and capital markets matters through his prior work experience and subsequent responsibilities. The broad range of his philanthropic activities, in the Chicago area in particular, gives him important insight into the community concerns of one of the Firm’s largest markets.
 
 
 
 
 
 
 
James Dimon, 57
 
Chairman and Chief Executive Officer of JPMorgan Chase
 
Director since 2004 and Chairman of the Board of Bank One Corporation from 2000 to 2004
 
 
 
 
 
 
Mr. Dimon became Chairman of the Board on December 31, 2006, and has been Chief Executive Officer and President since December 31, 2005. He had been President and Chief Operating Officer since JPMorgan Chase’s merger with Bank One Corporation in July 2004. At Bank One he had been Chairman and Chief Executive Officer since March 2000. Prior to joining Bank One, Mr. Dimon had extensive experience at Citigroup Inc., the Travelers Group, Commercial Credit Company and American Express Company.
Mr. Dimon graduated from Tufts University in 1978 and received an MBA from Harvard Business School in 1982. He serves on the Board of Directors of Harvard Business School and Catalyst and is a member of The Business Council. He is also on the Board of Trustees of New York University School of Medicine. Mr. Dimon does not serve on the board of any publicly traded company other than JPMorgan Chase.
Mr. Dimon has many years of experience in the financial services business, both wholesale and retail, as well as international and domestic experience. As CEO, he is intimately familiar with all aspects of the Firm’s business activities. In addition to the JPMorgan Chase merger with Bank One, he led the Firm’s successful acquisition and integration of The Bear Stearns Companies Inc. and the banking operations of Washington Mutual Bank. His business experience and his former service on the board of the Federal Reserve Bank of New York have given him experience dealing with government officials and agencies and insight into the regulatory process.

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Timothy P. Flynn, 56
Retired Chairman of KPMG International, professional services
Director since May 2012
 
 
 
 
 
 
 
 
Mr. Flynn was Chairman of KPMG International from 2007 until his retirement in October 2011.  KPMG International is a professional services organization which provides audit, tax and advisory services in 152 countries. He was also Chairman (2005–2010) and Chief Executive Officer (2005–2008) of KPMG LLP, the U.S. and largest individual member firm of KPMG International. Mr. Flynn is a director of Wal-Mart Stores, Inc. (since 2012).
Mr. Flynn held a number of key leadership positions throughout his 32 years at KMPG, providing him with perspective on the issues facing major companies and the evolving business environment. Additionally, he has extensive experience in financial services and risk management. Prior to serving as Chairman and Chief Executive Officer, Mr. Flynn served, among other positions, as Vice Chairman, Audit and Risk Advisory Services, with operating responsibility for the audit practice, as well as the Risk Advisory and Financial Advisory Services practices.
Mr. Flynn holds a bachelors degree in accounting from The University of St. Thomas, St. Paul, Minnesota and is a member of their Board of Trustees. He has previously served as a trustee of the Financial Accounting Standards Board, a member of the World Economic Forum’s International Business Counsel, and a founding member of The Prince of Wales’ International Integrated Reporting Committee.
Mr. Flynn combines leadership and business experience in a global setting with experience in accounting, auditing, financial services, risk management and regulatory affairs.
 
 
 
 
 
Ellen V. Futter, 63
President and Trustee of the American Museum of Natural History
Director since 2001 and Director of J.P. Morgan & Co. Incorporated from 1997 to 2000
 
 
 
 
Ms. Futter became President of the American Museum of Natural History in 1993, prior to which she had been President of Barnard College since 1981. The Museum is one of the world’s preeminent scientific, educational and cultural institutions. Her career began at Milbank, Tweed, Hadley & McCloy where she practiced corporate law. Ms. Futter is a director of Consolidated Edison, Inc. (since 1997) and was previously a director of American International Group Inc. (1999–2008) and Viacom (2006–2007). She was a director of the Federal Reserve Bank of New York (1988–1993) and served as its Chairman (1992–1993).
Ms. Futter graduated from Barnard College in 1971 and earned a law degree from Columbia Law School in 1974. She is a member of the Board of Overseers and Managers of Memorial Sloan-Kettering Cancer Center, a Fellow of the American Academy of Arts and Sciences and a member of the Council on Foreign Relations. Ms. Futter is also a trustee of the Brookings Institution, and a director of The American Ditchley Foundation and NYC & Company.
Ms. Futter has managed large educational and not-for-profit organizations, Barnard College and the American Museum of Natural History, and in that capacity, she has dealt with many complex organizational issues. Such work and her service on public company boards and the board of the Federal Reserve Bank of New York have given her experience with regulated enterprises, in particular the financial services industry, and with risk management, executive compensation, and audit and financial reporting. In her role at the Federal Reserve Bank of New York she also acquired valuable experience dealing with government officials and agencies. Her years of practicing corporate law give her enhanced perspective on legal and regulatory issues. Her extensive experience with philanthropic organizations provides her with insights that are relevant to the Firm’s corporate responsibility initiatives.

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Laban P. Jackson, Jr., 70
Chairman and Chief Executive Officer of Clear Creek Properties, Inc., real estate development
Director since 2004 and Director of Bank One Corporation from 1993 to 2004
 
 
 
 
Mr. Jackson has been Chairman of Clear Creek Properties, Inc., a real estate development company, since 1989. He is a director of J.P. Morgan Securities plc and of JPMorgan Chase Bank, N.A., wholly-owned subsidiaries of the Firm (since 2010). He previously served as director of The Home Depot (2004–2008).
Mr. Jackson graduated from the United States Military Academy in 1965. He was a director of the Federal Reserve Bank of Cleveland (1987–1992). Mr. Jackson is also a director of Markey Cancer Foundation.
Mr. Jackson has founded and managed businesses and is an experienced entrepreneur and manager. In that capacity, and through his current and prior service on other public company boards, he has dealt with a wide range of issues that are important to the Firm’s business, including audit and financial reporting, risk management, executive compensation, marketing and product development. His service on the board of the Federal Reserve Bank of Cleveland has given him experience dealing with government officials and agencies and further experience in financial services.
Mr. Jackson is a member of the Audit Committee Leadership Network (“ACLN”), a group of audit committee chairs from some of North America’s leading companies, committed to improving the performance of audit committees and helping to enhance trust in the financial markets.
 
 
 
 
 
Lee R. Raymond, 74
Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation, oil and gas
Director since 2001 and Director of J.P. Morgan & Co. Incorporated from 1987 to 2000
 
 
 
 
 
 
 
 
Mr. Raymond was Chairman of the Board and Chief Executive Officer of ExxonMobil from 1999 until he retired in December 2005. ExxonMobil’s principal business is energy, involving exploration for and production of crude oil and natural gas, manufacture of petroleum and petrochemical products, and transportation and sale of crude oil, natural gas, petroleum and petrochemical products. He had been Chairman of the Board and Chief Executive Officer of Exxon Corporation from 1993 until its merger with Mobil Oil Corporation in 1999, having begun his career in 1963 with Exxon. He was a director of Exxon Mobil Corporation (1984–2005).
Mr. Raymond graduated from the University of Wisconsin in 1960 and received a Ph.D. from the University of Minnesota in Chemical Engineering in 1963. He is a director of the Business Council for International Understanding, a Trustee of the Wisconsin Alumni Research Foundation, a Trustee of the Mayo Clinic, a member of the Innovations in Medicine Leadership Council of UT Southwestern Medical Center, a member of the National Academy of Engineering and a member and past Chairman of the National Petroleum Council.
During his long tenure at Exxon Mobil and its predecessors, Mr. Raymond gained important experience in all aspects of business management, including audit and financial reporting, risk management, executive compensation, marketing, and operating in a regulated industry. He has extensive international business experience.


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William C. Weldon, 64
Retired Chairman and Chief Executive Officer of Johnson & Johnson, health care products
Director since 2005
 
 
 
 
 
 
 
 
Mr. Weldon was Chairman and Chief Executive Officer of Johnson & Johnson from 2002. He retired as Chief Executive Officer in April 2012 and as Chairman in December 2012. He served as Vice Chairman from 2001 and Worldwide Chairman, Pharmaceuticals Group from 1998 until 2001. Johnson & Johnson is engaged worldwide in the research and development, manufacture and sale of a broad range of products in the health care field. The company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being.
Mr. Weldon served in a number of other senior executive positions since joining Johnson & Johnson in 1971. In 1982 he was named manager, ICOM Regional Development Center in Southeast Asia. Mr. Weldon was appointed executive vice president and managing director of Korea McNeil, Ltd., in 1984 and managing director of Ortho-Cilag Pharmaceutical, Ltd., in the U.K. in 1986. In 1989, he was named vice president of sales and marketing at Janssen Pharmaceutica in the U.S., and in 1992 he was appointed president of Ethicon Endo-Surgery. Mr. Weldon was a director of Johnson & Johnson (2002 until December 2012).
Mr. Weldon graduated from Quinnipiac University in 1971. Mr. Weldon is a member of the CEO Roundtable on Cancer, a director of the US-China Business Council, a member of the Healthcare Leadership Council, and a member of the Sullivan Commission on Diversity in the Health Professions Workforce. Mr. Weldon also serves on the Liberty Science Center Chairman’s Advisory Council and as a member of the Board of Trustees for Quinnipiac University. He previously served as Chairman of the Pharmaceutical Research and Manufacturers of America.
Mr. Weldon has experience managing a large complex organization at Johnson & Johnson, where he has dealt with such issues as audit and financial reporting, risk management, and executive compensation. Through his role at various Johnson & Johnson entities, he has had extensive exposure to international business management and to operating in a regulated industry, and he has gained expertise in sales and marketing to consumers. His extensive record of charitable involvement and public service also brings an important perspective to his role on the Board.
 
Corporate governance
Introduction
Governance is a continuing focus at JPMorgan Chase, starting with the Board of Directors and extending throughout the Firm. In this section we describe some of our key governance practices.
Corporate Governance Principles of the Board — The Board of Directors first adopted Corporate Governance Principles in 1997, and has revised them periodically since then to reflect evolving best practices and regulatory requirements, including the New York Stock Exchange (“NYSE”) corporate governance listing standards. The Corporate Governance Principles establish a framework for the governance of the Firm.
Board leadership structure — The Board of Directors is responsible for the oversight of management on behalf of the Firm’s shareholders. The Board accomplishes this function acting directly and through its committees. Directors discharge their duties at Board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer (“CEO”), management and others regarding matters of concern and interest to the Firm. Specific elements of our Board leadership structure are outlined in Appendix A and include:
Chairman of the Board — The Firm’s Board of Directors has no established policy on whether or not to have a non-executive chairman and believes that it should make that judgment based on circumstances and experience. The Board has determined that the most effective leadership model for the Firm currently is that Mr. Dimon serves as both Chairman and Chief Executive Officer, and that the independent directors annually appoint an independent director to serve as the Presiding Director. The Board believes it is functioning effectively under its current structure, and that the current structure provides appropriate oversight protections. The Board does not believe

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that introducing a separate Chairman at this time and with this CEO would provide appreciably better direction for and performance of the Firm, and instead could cause uncertainty, confusion and inefficiency in board and management function and relations.
Independent oversight — Independent directors comprise more than 90% of the Board and 100% of the Audit Committee, Compensation & Management Development Committee (the “Compensation Committee”), Governance Committee, Public Responsibility Committee and Risk Policy Committee. At each regularly scheduled Board meeting, the independent directors generally meet in executive session with no members of management present and may discuss any matter they deem appropriate, including evaluation of the CEO and other senior officers and determination of their compensation.
Presiding Director — The Firm’s Presiding Director functions as a Lead Director, but the Board prefers the term Presiding Director to emphasize that all directors share equally in their responsibilities as members of the Board. The Presiding Director presides at executive sessions of independent directors (generally held as part of each regularly scheduled Board meeting) and at all Board meetings at which the Chairman is not present, and has authority to call meetings of independent directors. The Presiding Director approves Board meeting agendas and schedules for each Board meeting, may add agenda items in his or her discretion, approves Board meeting materials for distribution to and consideration by the Board, facilitates communication between the Chairman and CEO and the independent directors, as appropriate, is available for consultation and communication with major shareholders where appropriate, upon reasonable request, and performs such other functions as the Board directs. The Presiding Director is appointed annually by and from among the independent directors.
Committee Chairs — All are independent and are appointed annually by the Board, approve agendas and material for respective committee meetings, and act as liaison between committee members and the Board and between committee members and senior management.
 
Committees of the Board
The Board has five principal standing committees: Audit Committee, Compensation Committee, Governance Committee, Public Responsibility Committee and Risk Policy Committee. The charter of each such committee can be found on our Website at www.jpmorganchase.com under Governance, which is under the About Us tab. Each member of the Audit Committee, the Compensation Committee and the Governance Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and within the meaning of regulations of the U.S. Securities and Exchange Commission (the “SEC”).
As stated in the Board’s Corporate Governance Principles, Board members have complete access to management, and the Board and Board committees can, if they wish to do so, seek legal or other expert advice from sources independent of management and shall be provided the resources for such purposes.

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The following outlines the oversight responsibilities of the Board’s principal committees. In addition to those responsibilities listed, each committee has oversight of reputational risk arising from matters within the scope of the committee.
Audit Committee — provides oversight of the independent registered public accounting firm’s qualifications and independence; the performance of the internal audit function and that of the independent registered public accounting firm; and management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of the Firm, assure the integrity of the Firm’s financial statements, and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations. The Board of Directors has determined that Mr. Bell, Ms. Bowles and Mr. Jackson are audit committee financial experts as defined by the SEC.
Compensation & Management Development Committee — reviews and approves the Firm’s compensation and benefit programs; ensures the competitiveness of these programs; and advises the Board on the development of and succession for key executives. The Compensation Committee periodically reviews and approves a statement of the Firm’s compensation principles and practices and also reviews the relationship among risk, risk management and compensation in light of the Firm’s objectives, including its safety and soundness and the avoidance of practices that would encourage excessive risk. Information on the Committee’s processes and procedures for consideration of executive compensation is provided in the Compensation Discussion and Analysis at page 16 .
Corporate Governance & Nominating Committee — exercises general oversight with respect to the governance of the Board of Directors, including reviewing the qualifications of nominees for election to the Board and making recommendations to the Board regarding director compensation. The Governance Committee leads the Board in its review and self-evaluation of the performance of the Board as a whole with a view to increasing the effectiveness of the Board.
Public Responsibility Committee — reviews and considers the Firm’s position and practices regarding public responsibility matters of significance to the Firm and provides guidance on these matters to management and the Board as appropriate.
Risk Policy Committee — provides oversight of the CEO’s and senior management’s responsibilities to: assess and manage the Firm’s credit risk, market risk, structural interest rate risk, investment risk, liquidity risk, fiduciary risk and model risk; ensure that there is in place an effective system reasonably designed to evaluate and control such risk throughout the Firm; and manage capital and liquidity planning and analysis.
Board and committee interaction — Committees meet regularly in conjunction with scheduled Board meetings, and hold additional meetings as needed. The Audit Committee and the Risk Policy Committee hold joint meetings on matters of mutual interest. The Compensation Committee meets at least annually with the Firm’s Chief Risk Officer and the Risk Policy Committee or its Chair to review elements of our organizational structure, management practices and compensation programs that would discourage unnecessary or excessive risk-taking and to assess our incentive arrangements. The committees report their activities and discuss their recommendations with the full Board.
Board committees membership The following table summarizes the membership of the Board and each of its principal committees, and the number of times each met during 2012:
Director 1
 
Audit

 
Compensation &
Management
Development

 
Corporate
Governance &
Nominating

 
Public
Responsibility

 
Risk Policy

James A. Bell
 
Member

 
 
 
 
 
 
 
 
Crandall C. Bowles
 
Member

 
 
 
 
 
Chair

 
 
Stephen B. Burke
 
 
 
Member

 
Member

 
 
 
 
David M. Cote
 
 
 
 
 
 
 
Member

 
Member

James S. Crown
 
 
 
 
 
 
 
 
 
Chair

James Dimon
 
 
 
 
 
 
 
 
 
 
Timothy P. Flynn
 
 
 
 
 
 
 
 
 
Member

Ellen V. Futter
 
 
 
 
 
 
 
Member

 
Member

Laban P. Jackson, Jr.
 
Chair

 
 
 
 
 
 
 
 
Lee R. Raymond 2
 
 
 
Chair

 
Member

 
 
 
 
William C. Weldon
 
 
 
Member

 
Chair

 
 
 
 
Number of meetings in 2012
 
16

 
7

 
4

 
4

 
8


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1
William H. Gray, III and David C. Novak did not stand for reelection when their terms expired on the eve of the annual meeting on May 15, 2012. Prior to such annual meeting, Mr. Gray served on the Audit Committee and the Public Responsibility Committee and Mr. Novak served on the Compensation Committee and the Governance Committee (and served as Chair of the latter until March 2012).
2
Presiding Director
During 2012, the Board met 15 times; each director attended 75% or more of the total meetings of the Board and the committees on which he or she served.
Other Board Committees In addition to the above committees, the Board has a Board-level Executive Committee and a Stock Committee. The Board-level Executive Committee consists of the CEO and the Chairs of the Board’s principal committees. It may exercise all the powers of the Board that lawfully may be delegated, but with the expectation that it would not take material actions absent special circumstances.
The Stock Committee, acting through the CEO, acts in accordance with Board-approved limitations and capital plans to implement the declaration of dividends, authorize the issuance of stock, administer the dividend reinvestment plan, and implement share repurchase plans. The Board may also from time to time establish a committee for a specific purpose. During 2012, Messrs. Jackson, Raymond and Weldon served on the Board’s Review Committee established in connection with the Firm’s Chief Investment Office (“CIO”), Messrs. Crown and Jackson served on a Mortgage Compliance Committee and Ms. Bowles and Messrs. Bell and Jackson served on an AML (Anti-Money Laundering) Enhancement Committee.
 
Director independence
Of the 11 directors on JPMorgan Chase’ s Board, ten (all but Mr. Dimon) meet the standard for independence.
Pursuant to the corporate governance listing standards of the NYSE, a majority of the Board of Directors (and each member of the Audit, Compensation and Governance Committees) must be independent. The Board of Directors may determine a director to be independent if the director has no disqualifying relationship as defined in the NYSE corporate governance rules and if the Board has affirmatively determined that the director has no material relationship with JPMorgan Chase, either directly or as a partner, shareholder, or officer of an organization that has a relationship with JPMorgan Chase.
The Board of Directors reviewed the relationships between the Firm and each director and determined that in accordance with the NYSE corporate governance listing standards and the Firm’s independence standards, each non-management director (James A. Bell, Crandall C. Bowles, Stephen B. Burke, David M. Cote, James S. Crown, Timothy P. Flynn, Ellen V. Futter, Laban P. Jackson, Jr., Lee R. Raymond and William C. Weldon) has only immaterial relationships with JPMorgan Chase and accordingly each is an independent director under these standards. Two directors who retired in May 2012, William H. Gray, III and David C. Novak, had only immaterial relationships with JPMorgan Chase and, accordingly, each was an independent director.
In connection with the assessment of director independence, the relationships listed in Appendix B are deemed immaterial unless the Board otherwise determines. Criteria relating to director independence may also be found in the Corporate Governance Principles on our Website. There are additional objective tests for independence in the NYSE rules and each of the nominees meets (and in the case of the retired directors met) these objective tests for independence as well. Under the NYSE rules, a director employed by the Firm cannot be deemed to be an independent director and, consequently, James Dimon is not an independent director of JPMorgan Chase.
In making its determinations concerning director independence, the Board considered the following transactions between the Firm and each director and nominee, their immediate family members and any such person’s principal business affiliations: extensions of credit made by bank subsidiaries of the Firm; financial products and services provided by subsidiaries of the Firm; business transactions for property or services contracted for by subsidiaries of the Firm; and charitable contributions made by the JPMorgan Chase Foundation or the Firm to any nonprofit organization of which a director or nominee is employed as an officer. The Board reviewed these relationships in light of the Firm’s and NYSE independence standards and determined that none of them create a material relationship between the Firm and the respective director or would impair the independence or judgment of the respective director. In particular, the Board considered:
Consumer credit — extensions of credit provided to directors Bell and Jackson; and credit cards issued to directors Bells, Bowles, Cote, Crown, Flynn, Futter, Jackson, and Raymond, and their immediate family members;
Wholesale credit — extensions of credit and other financial and financial advisory services provided to Springs Industries, Inc. and its subsidiaries, where Ms. Bowles is Chairman of the Board; NBCUniversal, LLC and Comcast Corporation and their subsidiaries, where Mr. Burke is Chief Executive Officer and Executive Vice President,

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respectively; Honeywell International Inc. and its subsidiaries, where Mr. Cote is Chairman and Chief Executive Officer; Henry Crown and Company, where Mr. Crown is President, and other Crown family-owned entities; and the American Museum of Natural History, where Ms. Futter is President and a Trustee; and
Goods, services and contributions — purchases of building safety and security equipment and maintenance services from Honeywell International Inc.; leases of office and retail space from subsidiaries of companies in which Mr. Crown and members of his immediate family have indirect ownership interests; and charitable contributions to the American Museum of Natural History.
All of the transactions, relationships and arrangements of the types listed above were entered into, and payments were made or received, by the Firm in the ordinary course of business and on substantially similar terms as those that would be offered to comparable counterparties in similar circumstances.
 
Other governance practices
Independent director meetings — Independent directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.
Majority voting for directors — The Firm’s By-laws provide a majority voting standard for election of directors in uncontested elections, with resignation tendered by any incumbent director who is not re-elected, and plurality voting in any election that is contested.
Board’s role in risk oversight — The Firm’s risk management is described in the Management Discussion and Analysis of the 2012 Annual Report starting at page 64 . As stated there, risk is an inherent part of JPMorgan Chase’s business activities and the Firm’s overall risk appetite is established in the context of the Firm’s capital, earnings power and diversified business model. The Firm’s risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of the major risks taken in its business activities.
In May 2012, the Firm announced that there had been significant trading losses in a synthetic credit portfolio within the Firm’s Chief Investment Office. The Firm appointed a Management Task Force to review the trading losses and the Board of Directors established an independent Review Committee of the Board (the “Board Review Committee”) to oversee the scope and work of the Management Task Force review, to assess the Firm’s risk management processes related to the issues raised in the Management Task Force review, and to report to the Board of Directors on the Board Review Committee’s findings and recommendations. On January 16, 2013, the Firm announced that the Firm’s Management Task Force and the Board Review Committee had each concluded their reviews and had released their respective reports. The Board Review Committee concurred in the substance of the Management Task Force Report. The Board Review Committee’s Report sets forth recommendations relating to the Board’s oversight of the Firm’s risk management processes, all of which have been approved by the full Board of Directors and have been, or are in the process of being, implemented. The reports are available on the Firm’s Website at www.jpmorganchase.com and are discussed in the Firm’s annual report.
The following outlines the Board’s ongoing role in risk oversight.
Risk appetite — The Firm employs a formalized risk appetite framework to clearly link risk appetite and return targets, controls and capital management.
— The CEO is responsible for setting the overall risk appetite for the Firm, and the line of business (“LOB”) CEOs are responsible for setting the risk appetite for their respective LOBs subject to approval by the CEO.
— The Risk Policy Committee approves the risk appetite policy on behalf of the entire Board of Directors.
Risk management framework — The Firm’s risk governance structure starts with each line of business being responsible for managing its own risks, with its own risk committee and a chief risk officer. Overlaying the line of business risk management are corporate functions with risk management-related responsibilities.
— Risk Management operates independently to provide oversight of firmwide risk management and controls, and is headed by the Firm’s Chief Risk Officer, who is a member of the Firm’s Operating Committee and reports to the CEO and is accountable to the Board of Directors, primarily through the Board’s Risk Policy Committee.
— The Chief Investment Office and Corporate Treasury are responsible for managing the Firm’s liquidity, interest rate and foreign exchange risk, and other structural risks.
— Legal has oversight for legal risk and Compliance has oversight for compliance risk.

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— Each LOB has a risk committee which includes in its mandate oversight of the reputational risks in its business.
Board oversight — The Board of Directors exercises its oversight of risk management principally through the Board’s Risk Policy Committee and Audit Committee.
— The Risk Policy Committee provides oversight of the CEO’s and senior management’s responsibilities to: assess and manage the Firm’s credit risk, market risk, structural interest rate risk, investment risk, liquidity risk, fiduciary risk and model risk; ensure that there is in place an effective system reasonably designed to evaluate and control such risk throughout the Firm; and manage capital and liquidity planning and analysis.
— The Audit Committee provides oversight of management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of the Firm, assure the integrity of the Firm’s financial statements, and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations.
— The Compensation Committee is responsible for reviewing the Firm’s compensation practices and the relationship among risk, risk management and compensation in light of the Firm’s objectives.
— Each of the committees oversees reputation risk issues within its scope of responsibility.
— The Board of Directors also reviews selected risk topics directly as circumstances warrant.
Shareholder outreach — We recognize the importance of shareholder communications to help our investors understand our performance and strategies. We reach out to shareholders in many different ways, including through quarterly earnings presentations, SEC filings, web communications, and investor meetings. In addition, our senior executives engage major institutional shareholders as part of a twice-annual outreach program to invite comments on governance matters, executive compensation, and shareholder proposals. We meet throughout the year with additional shareholders and organizations interested in our practices.
Special shareholder meetings and action by written consent — The Firm’s By-laws permit shareholders holding at least 20% of the outstanding shares of common stock (net of hedges) to call special meetings. The Board is proposing for shareholder approval an amendment to the Firm’s Certificate of Incorporation that would permit shareholders to act by written consent on terms intended to be substantially similar to the terms applicable to call special meetings. See page 41 .
Code of Conduct and Code of Ethics for Finance Professionals — The JPMorgan Chase Code of Conduct is a collection of rules and policy statements governing employees’ conduct in relation to the Firm’s business. In addition, the Firm has a Code of Ethics for Finance Professionals that applies to the CEO, President, Chief Financial Officer (“CFO”), Chief Accounting Officer, and to all other professionals of the Firm worldwide serving in a finance, accounting, corporate treasury, tax or investor relations role. The purpose of the Code of Ethics for Finance Professionals is to promote honest and ethical conduct and compliance with the law, particularly as related to the maintenance of the Firm’s financial books and records and the preparation of its financial statements. The Firm provides a Code Reporting Hotline operated by an independent third party, through which employees can report suspected violations of the Code of Conduct or other policies.
Political contributions and legislative lobbying — We believe that it is in the shareholders’ best interests for the Firm to be an effective participant in the legislative and regulatory process and that governance and transparency are important components of our process. The Firm supports its interests in the political arena in a variety of ways. Our philosophy, policies and disclosures concerning political contributions and legislative lobbying, as well as the compliance procedures and oversight we have in place, reflect our commitment to civic participation and transparency. These are described in our Political Activities Statement which can be found on our public Website at www.jpmorganchase.com under Governance.
The Firm discloses all contributions made by its affiliated political action committees or PACs (funded entirely by voluntary contributions from the Firm’s employees) to candidates for political office and to 527 organizations on our Website. The Firm may from time to time support state ballot initiatives and broad-based groups organized under Section 527 of the Internal Revenue Code. Direct contributions to 527 groups are not made to support the election of any candidate or for the purpose of express advocacy. The Firm belongs to a number of trade associations representing the interests of both the financial services industry and the broader business community. We voluntarily report on our Website such contributions to 527 groups and state ballot initiatives, and the principal trade associations to which we belong.

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Board communications — Shareholders and interested parties who wish to contact any Board member or committee chair, the Presiding Director, or the independent directors as a group, may mail correspondence to: JPMorgan Chase & Co., Attention (name of Board member(s)), Office of the Secretary, 270 Park Avenue, New York, New York 10017 or e-mail the Office of the Secretary at corporate.secretary@jpmchase.com.
Documents available — The Corporate Governance Principles, Code of Conduct, Code of Ethics for Finance Professionals, and the JPMorgan Chase & Co. Political Activities Statement, as well as the Firm’s By-laws and charters of our principal Board committees, can be found on our Website at www.jpmorganchase.com under Governance, which is under the About Us tab. These documents will also be made available to any shareholder who requests them by writing to the Secretary at: JPMorgan Chase & Co., Office of the Secretary, 270 Park Avenue, New York, New York 10017.
 
Director compensation
Annual compensation — The Board believes it is desirable that a significant portion of director compensation be linked to the Firm’s common stock, and the Board’s total compensation includes approximately one-third cash and two-thirds stock-based compensation. In 2012, each non-management director received an annual cash retainer of $75,000 and an annual grant, made when annual employee incentive compensation was paid, of deferred stock units valued at $170,000 on the date of grant. The director retainer and annual grant amounts have not changed since 2003.
Each deferred stock unit represents the right to receive one share of the Firm’s common stock and dividend equivalents payable in deferred stock units for any dividends paid. Deferred stock units have no voting rights. In January of the year immediately following a director’s termination of service, deferred stock units are distributed in shares of the Firm’s common stock in either a lump sum or in annual installments for up to 15 years as elected by the director.
Each director who is a member of the Audit Committee receives an additional annual cash retainer of $10,000. Each chair of a board committee receives an additional retainer of $15,000 per year. Directors who are officers of the Firm do not receive any fees for their service as directors.
The following table summarizes annual compensation for non-management directors for 2012.
Compensation
Amount ($)

Board retainer
$
75,000

Committee chair retainer
15,000

Audit Committee member retainer
10,000

Deferred stock unit grant
170,000

Going forward, the Presiding Director will receive an additional cash retainer of $30,000 per year.
The Board may periodically request directors to serve on compliance-related or other committees which are not one of the Board’s principal committees or to serve on the board of directors of a subsidiary of the Firm. Any compensation for such service is included in the below Director compensation table.
Stock ownership guidelines — As stated in the Corporate Governance Principles, directors pledge that, for as long as they serve, they will retain all shares of the Firm’s common stock purchased on the open market or received pursuant to their service as a board member.
Deferred compensation — Each year non-management directors may elect to defer all or part of their cash compensation. A director’s right to receive future payments under any deferred compensation arrangement is an unsecured claim against JPMorgan Chase’s general assets. Cash amounts may be deferred into various investment equivalents, including deferred stock units. Upon retirement, compensation deferred into stock units will be distributed in stock; all other deferred cash compensation will be distributed in cash. Deferred compensation will be distributed in either a lump sum or in annual installments for up to 15 years as elected by the director commencing in January of the year following the director’s retirement from the Board.
Reimbursements and insurance — The Firm reimburses directors for their expenses in connection with their board service. We also pay the premiums on directors’ and officers’ liability insurance policies and on travel accident insurance policies covering directors as well as employees of the Firm.

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2012 Director compensation table — The following table shows the compensation for each director in 2012.
Director
 
Fees earned or 
paid in cash ($) 1

 
2012 Stock 
award ($)  2

 
Total ($)

James A. Bell
 
$
85,000

 
$
170,000

 
$
255,000

Crandall C. Bowles
 
100,000

 
170,000

 
270,000

Stephen B. Burke
 
75,000

 
170,000

 
245,000

David M. Cote
 
75,000

 
170,000

 
245,000

James S. Crown 3
 
132,500

 
170,000

 
302,500

Timothy P. Flynn 4
 
50,000

 

 
50,000

Ellen V. Futter
 
75,000

 
170,000

 
245,000

William H. Gray, III 4
 
35,417

 
170,000

 
205,417

Laban P. Jackson, Jr. 5
 
255,000

 
170,000

 
425,000

David C. Novak 4
 
35,000

 
170,000

 
205,000

Lee R. Raymond
 
90,000

 
170,000

 
260,000

William C. Weldon
 
86,250

 
170,000

 
256,250

1
Includes fees earned, whether paid in cash or deferred.
2
The aggregate number of option awards and stock awards outstanding at December 31, 2012 , for each current director is included in the Security ownership of directors and executive officers table at page 15 under the columns “Options/SARs exercisable within 60 days” and “Additional underlying stock units,” respectively. All such awards are vested.
3
Mr. Crown received $42,500 in compensation during 2012 in consideration of his service as a member of the Mortgage Compliance Committee of the board of directors of JPMorgan Chase Bank, N.A. (the “Bank”), a wholly-owned subsidiary of JPMorgan Chase. Each non-management director serving on the Mortgage Compliance Committee is paid $2,500 for each committee meeting attended.
4
Mr. Flynn joined the Board in May 2012. Mr. Gray and Mr. Novak retired from the Board in May 2012 on the eve of the 2012 annual meeting. Retainers for Board and committee memberships were pro-rated.
5
Mr. Jackson received $110,000 in compensation during 2012 in consideration of his service as a director of J.P. Morgan Securities plc, an indirect wholly-owned subsidiary of JPMorgan Chase and one of the Firm’s principal operating subsidiaries in the United Kingdom (“U.K.”). Mr. Jackson also received $45,000 in compensation during 2012 in consideration of his service as a member of the Mortgage Compliance Committee.

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Security ownership of directors and executive officers
Our share retention policies require share ownership for directors and executive officers, as described at page 26 .
The following table shows the number of shares of common stock and common stock equivalents beneficially owned as of February 28, 2013 , including shares that could have been acquired within 60 days of that date through the exercise of stock options or stock appreciation rights (“SARs”), together with additional underlying stock units as described in note 3 to the table, by each director, the current executive officers named in the Summary compensation table, and all directors and executive officers as a group. Unless otherwise indicated, each of the named individuals and member of the group has sole voting power and sole investment power with respect to shares owned. The number of shares beneficially owned, as that term is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as of February 28, 2013 , by all directors and executive officers as a group and by each director and named executive officer individually is less than 1% of our outstanding common stock.
We have been notified by BlackRock, Inc., 40 East 52nd Street, New York, NY 10022, that, as of December 31, 2012, it, in its capacity as a parent holding company or control person in accordance with SEC Rule 13d-1(b)(1)(ii)(G), is the beneficial owner of 263,824,387 shares of our common stock, representing 6.94% of our outstanding common stock. According to the Schedule 13G dated February 4, 2013, filed with the SEC, in the aggregate, BlackRock, Inc. and the affiliated entities included in the Schedule 13G (“BlackRock”) have sole dispositive power and sole voting power over 263,824,387 shares.
Security ownership:
 
 
 
 
 
 
 
 
 
 
 
 
Beneficial ownership
 
 
 
 
Name
 
Common
Stock (#)  1, 2

 
Options/SARs
exercisable within
60 days (#)

 
Total  beneficial
ownership (#)

 
Additional
underlying stock
units (#) 3

 
Total (#)

James A. Bell
 
135

 
0

 
135

 
8,534

 
8,669

Crandall C. Bowles
 
6,280

 
0

 
6,280

 
49,477

 
55,757

Stephen B. Burke
 
32,107

 
0

 
32,107

 
68,673

 
100,780

David M. Cote
 
14,000

 
0

 
14,000

 
41,977

 
55,977

James S. Crown 4
 
11,369,019

 
0

 
11,369,019

 
126,628

 
11,495,647

James Dimon
 
5,774,852

 
1,198,053

 
6,972,905

 
684,022

 
7,656,927

Mary Callahan Erdoes
 
159,374

 
1,096,973

 
1,256,347

 
433,705

 
1,690,052

Timothy P. Flynn
 
10,000

 
0

 
10,000

 
4,898

 
14,898

Ellen V. Futter
 
951

 
0

 
951

 
73,831

 
74,782

Laban P. Jackson, Jr. 5
 
25,864

 
10,690

 
36,554

 
100,520

 
137,074

Daniel E. Pinto
 
337,470

 
847,423

 
1,184,893

 
248,361

 
1,433,254

Lee R. Raymond 5
 
1,850

 
0

 
1,850

 
176,269

 
178,119

William C. Weldon
 
1,200

 
0

 
1,200

 
56,260

 
57,460

Matthew E. Zames
 
180,358

 
247,423

 
427,781

 
558,784

 
986,565

All directors and current executive officers as a group (22 persons) 5,6
 
19,174,185

 
7,671,765

 
26,845,950

 
4,457,116

 
31,303,066

 
1
Shares owned outright, except as otherwise noted.
2
Includes shares pledged as security, including shares held by brokers in margin loan accounts whether or not there are loans outstanding, as follows: Mr. Crown, 11,010,795 shares; Mr. Burke, 32,107 shares; and all directors and executive officers as a group, 11,042,902 shares. Directors pledge to retain all shares of JPMorgan Chase while they serve as a director.
3
Amounts include for directors and executive officers, shares or deferred stock units, receipt of which has been deferred under deferred compensation plan arrangements. For executive officers, amounts also include unvested restricted stock units (“RSUs”) and share equivalents attributable under the JPMorgan Chase 401(k) Savings Plan.
4
Includes 139,406 shares Mr. Crown owns individually; 9,463,672 shares owned by partnerships of which Mr. Crown is a partner; 1,547,123 shares owned by a partnership whose partners include a corporation of which Mr. Crown is a director, officer and shareholder, and a trust of which Mr. Crown is a beneficiary. Also includes 168,305 shares owned by trusts of which Mr. Crown is a co-trustee and beneficiary; 12,373 shares owned by Mr. Crown’s spouse; and 38,140 shares held in trusts for the benefit of his children. Mr. Crown disclaims beneficial ownership of the shares held by the various persons and entities described above except for the shares he owns individually and, with respect to shares owned by entities, except to the extent of his pecuniary interest in such entities.
5
As of February 28, 2013, Mr. Jackson held 400 depositary shares, each representing a one-tenth interest in a share of JPMorgan Chase’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I (“Series I Preferred”), and 15,000 depositary shares, each representing a 1/400th interest in a share of JPMorgan Chase’s 8.625% Non-Cumulative Perpetual Preferred Stock, Series J (“Series J Preferred”). Mr. Raymond held 2,000 depositary shares of Series I Preferred. All directors and current executive officers as a group own 2,400 depositary shares of Series I Preferred and 15,000 depositary shares of Series J Preferred.
6
Douglas L. Braunstein ceased to be an executive officer effective December 31, 2012; his ownership is not included in this table.

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Compensation Discussion and Analysis 1  
2012 Business performance overview
Record net income. For the third consecutive year, the Firm reported both record net income and a return on tangible common equity of 15% . Net income was $21.3 billion (an increase of 12% ), or $5.20 per share, on net revenue of $97.0 billion .
Strong underlying performance. The Firm’s 2012 results reflected strong underlying performance across virtually all its businesses, with strong lending and deposit growth.
Within Consumer & Community Banking:
Consumer & Business Banking added 106 net branches and increased average deposits by 9% in 2012.
Business Banking loans increased to a record $18.9 billion, up 7% compared with 2011.
Mortgage Banking reported strong production revenue driven by strong originations growth.
Credit card sales volume on cards issued to consumers and small businesses was up 11% for the year.
The Corporate & Investment Bank:
Maintained its #1 ranking in Global Investment Banking Fees.
Ranked #1 in Fixed Income Markets revenue.
Ranked #1 in All American Fixed Income and Equity Research.
Ranked #1 USD wire clearer with 20% share of Fed and CHIPS.
Reported assets under custody of $18.8 trillion at December 31, 2012.
Commercial Banking reported record net revenue of $6.8 billion and record net income of $2.6 billion in 2012. Commercial Banking loans increased to a record $128.2 billion, up 14%.
Asset Management reported record revenue in 2012 and achieved its fifteenth consecutive quarter of positive net long-term client flows into assets under management. Asset Management also increased loan balances to a record $80.2 billion at December 31, 2012.
Fortress balance sheet. JPMorgan Chase ended the year with a Basel I Tier 1 common ratio of 11% , compared with 10.1% at year-end 2011. The Firm estimated that its Basel III Tier 1 common ratio was approximately 8.7% at December 31, 2012 (including the estimated impact of final Basel 2.5 rules and the Basel III Advanced Notice of Proposed Rulemaking).
Helping customers, clients and communities. During 2012, the Firm worked to help its customers, corporate clients and the communities in which it does business.
The Firm provided credit and raised capital of more than $1.8 trillion for its clients during 2012; this included $20 billion loaned to small businesses and $85 billion for nearly 1,500 nonprofit and government entities, including states, municipalities, hospitals and universities.
The Firm also originated more than 920,000 mortgages, and provided credit cards to approximately 6.7 million people. Since the beginning of 2009, the Firm has offered nearly 1.4 million mortgage modifications and of these approximately 610,000 have achieved permanent modifications.
Made more than $190 million in philanthropic donations to nonprofit entities in 37 countries around the world to support community development, education, and arts and culture. More than 43,000 of our people provided more than 468,000 hours of volunteer service in local communities around the globe.
Hired nearly 5,000 U.S. military since the beginning of 2011.
The foregoing results include the effect of significant losses incurred in 2012 in the Synthetic Credit Portfolio within the CIO.

_______________________
1
For notes on non-GAAP and other financial measures, including managed basis reporting relating to the Firm’s business segments, see Appendix E at page 68 .


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The charts below show the growth in the Firm’s earnings, earnings per share (“EPS”), book value per share (“BVPS”) and tangible book value per share (“TBVPS”) for the period between 2007 and 2012. Over the 5-year period, earnings per share for the Firm grew 4%. Book value per share grew 7% and tangible book value per share grew 12% over the same 5-year period.
Uninterrupted record of delivering annual and quarterly net income throughout the crisis
The chart below shows the Firm’s annualized total shareholder return, assuming reinvestment of dividends, over the 5-year period 2007 through 2012, relative to the broad S&P 500 Index, the industry specific KBW Bank Index and the S&P 500 Financial Index.
Performance of the Firm on a through-the-cycle basis 1  
1 The S&P 500 Index is a commonly referenced U.S. equity benchmark consisting of leading companies from different economic sectors. The KBW Bank Index seeks to reflect the performance of banks and thrifts that are publicly-traded in the U.S. and is composed of 24 leading national money center and regional banks and thrifts. The S&P Financial Index is an index of 80 financial companies, all of which are components of the S&P 500. The Firm is a component of all three industry indices.

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Compensation principles and practices
Compensation determinations are guided by the JPMorgan Chase Compensation Principles and Practices. As described in this section and in Appendix C, these principles include:
Maintaining strong governance: Independent Board oversight of the Firm’s compensation principles and practices and their implementation
Attracting and retaining top talent: A recognition that competitive and reasonable compensation helps attract and retain the high quality people necessary to grow and sustain our businesses
Tying compensation to performance:
A focus on the qualitative as well as the quantitative performance of the individual employee, the relevant line of business or function and the Firm as a whole
A focus on multi-year, long-term, risk-adjusted performance and rewarding behavior that generates sustained value for the Firm through business cycles
Performance assessments that are broad-based and balanced, including an emphasis on teamwork and a “shared success” culture
Aligning with shareholder interests:
A significant stock component (with deferred vesting) for shareholder alignment and retention of top talent
Very strict limits or prohibitions on executive perquisites, special executive retirement severance plans, and no golden parachutes
Integrating risk and compensation:
Input into compensation determinations by risk and control functions
Although awards are made with the expectation that they will vest in accordance with their terms, all awards contain strong recovery provisions, and additional risk-related recovery provisions apply to the Operating Committee, the Firm’s most senior management group, and to a group of senior employees we refer to as Tier 1 employees with primary responsibility for risk positions, credit decisions, finance, controls and risk management
Shares received by Operating Committee members are subject to robust retention requirements and a prohibition on hedging
 
Compensation decisions for Named Executive Officers
Pay for performance — The Compensation & Management Development Committee uses its business judgment to determine the compensation of the CEO and approve compensation for other members of the Operating Committee, focusing on multi-year results and a qualitative and quantitative view of their total contribution.
As Chairman and CEO, Mr. Dimon is responsible for guiding the Firm’s financial performance and growth, its strategic and operational priorities, risk and control management, and management development and succession planning. Mr. Dimon reviews the priorities for the Firm with the Board of Directors and, in consultation with the Compensation & Management Development Committee and the Board, establishes the priorities for each LOB CEO annually, which are the priorities of the businesses they lead. Heads of functions also review and establish their priorities with the CEO.
Mr. Dimon discusses with the Compensation & Management Development Committee his assessment of the performance of each other member of the Operating Committee with respect to individual contributions, risk and control management and business or function performance, as well as overall Firm performance. Mr. Dimon makes compensation recommendations to the Compensation & Management Development Committee for their consideration as part of their approval process.
Business-specific objectives are evaluated at various points during the year, including during the budget process and monthly business reviews. Each of our businesses reviews its priorities with investors at our annual Investor Day, held most recently on February 26, 2013. Each LOB CEO also reviews 2012 results and the outlook for the future in letters in the Annual Report. We recommend reading those letters and the Chairman’s letter for a fuller

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understanding of the priorities and performance of the Firm and its businesses. Appendix E is a summary of firmwide and LOB priorities and progress.
James Dimon: Chairman and Chief Executive Officer. As announced on January 16, 2013, the Board approved 2012 total compensation for Jamie Dimon, Chairman and Chief Executive Officer, in the amount of $11.5 million, down 50% from the prior year. Compensation included salary of $1.5 million (flat with the prior year) and incentive compensation of $10 million, all in the form of restricted stock units (RSUs) (down 53.5% from the prior year). The RSUs vest over a period of three years, half after two years and the other half after three years. The Board also deferred, for a period of up to 18 months (i.e., up to July 22, 2014), vesting on options in the form of stock appreciation rights (SARs) it had granted Mr. Dimon in January 2008.
In making its compensation determinations, the Board focused on the long-term, as well as the annual, performance of the Firm and on the entire range of Mr. Dimon’s responsibilities, and took into consideration both the continued strong performance of the Firm, and the CIO losses, including Mr. Dimon’s responsibility as the Firm’s Chief Executive Officer.
Mr. Dimon’s leadership and management abilities are reflected in the continued strong performance of the Firm (including progress on its long-term strategic priorities, actual financial results, financial performance relative to competitors and qualitative factors), as reflected in the:
Strength of the Firm’s 2012 operating results and financial performance
Third consecutive year of record net earnings and 15% ROTCE
Record net earnings of $21.3 billion, a 12% increase from 2011
ROE of 11%
Record EPS of $5.20 per share, a 16% increase from 2011
Common share price increase by 32% in 2012; total return with dividends of 36%
Strong performance of the Firm relative to key competitors
Uninterrupted record of delivering annual and quarterly net income throughout the financial crisis, subsequent recession, and CIO losses
Maintenance of a fortress balance sheet
Continued investment in organic growth and the strengthening of the Firm’s major businesses
 


Mr. Dimon also has strengthened the foundation of the Firm’s future in leading a reorganization of the Firm’s businesses around customer needs by integrating the Chase consumer businesses under the Consumer & Community Banking line of business and the J.P. Morgan Investment Bank and Treasury & Securities Services wholesale lines of business under the Corporate & Investment Bank line of business. As part of this reorganization, he also has helped further develop the succession of a new generation of senior management capable of leading the Firm’s businesses and key functions in the future.
With respect to the losses incurred in CIO, the Board views the CIO losses as a serious mistake by the Firm, but believes that one of the marks of a successful company is how it addresses its mistakes, learns from them and implements meaningful remedial actions. As Chief Executive Officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses in CIO and has accepted responsibility for such failures. Importantly, once Mr. Dimon became aware of the seriousness of the issues presented by CIO, he responded forcefully by directing a thorough review and an extensive program of remediation. The Firm:
Strengthened the risk and control groups responsible for CIO
Formed the Management Task Force to review and address the circumstances related to the CIO losses
Has implemented, or is in the process of implementing, the remedial enhancements noted in the Management Task Force Report and the recommended improvements set forth in the Board Review Committee Report

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With respect to compensation and personnel actions as a result of CIO, the Firm took the following actions, all of which were reviewed with the Board:
The compensation actions for the Chief Executive Officer and the former Chief Financial Officer as detailed in this section and approved by the Board
Replaced the management team responsible for the losses
Invoked comprehensive clawbacks of previously granted outstanding awards and/or repayment of previously vested awards subject to clawbacks for those with primary responsibility (over $100 million recaptured)
For a group of employees deemed to have been closely associated with CIO events, reduced or eliminated compensation that otherwise would have been awarded by an aggregate of approximately 60%
A number of employees were permitted to resign or reassigned to other positions deemed to be more appropriate and experienced significant reductions in compensation
Other Named Executive Officers. The following provides highlights of performance considered in compensation determinations for the NEOs other than Mr. Dimon. These compensation determinations reflect recognition of substantial progress in meeting the objectives of the LOBs and the Firm as a whole, and also reflect the losses in the CIO.
Douglas Braunstein: Vice Chairman (Former Chief Financial Officer). Mr. Braunstein became CFO in June 2010 and remained in that role until December 31, 2012, after which he became Vice Chairman. Prior to becoming CFO, Mr. Braunstein led Investment Banking coverage for the Americas and held other senior roles in the Investment Bank. In his new role, Mr. Braunstein will focus on serving top clients of the Firm, drawing on his years of experience and his experience in key client coverage roles in the Investment Bank.
In making its compensation determination, the Compensation & Management Development Committee focused on the entire range of Mr. Braunstein’s responsibilities. As he had in the prior year, during 2012 Mr. Braunstein continued to further the Firm’s fundamental objectives of maintaining strong financial discipline, guarding safety and soundness, liquidity management, assisting in managing the Firm’s interaction with regulatory and supervisory authorities, and collaborating with the LOBs to drive business performance, growth, efficiency and returns.
With respect to the losses incurred in CIO, in July 2012 the Firm reported that it had determined that a material weakness existed in its internal controls over financial reporting at March 31, 2012, related to the valuation control function for the synthetic credit portfolio managed by CIO during the first quarter of 2012. The control deficiency was closed out by September 30, 2012. The Management Task Force Report also noted weaknesses in the performance of the CIO Finance organization in the events leading up to the CIO losses. The Finance organization, which was led by Mr. Braunstein, was responsible for such weaknesses.
In consideration of the above, the Committee approved the following compensation:
$750,000 in base salary, no increase in 2012 or for 2013
A $2.125 million cash incentive for 2012, compared to $2.9 million for 2011
An RSU award of $2.125 million, compared to $4.35 million for 2011
No SARs, compared to $1.5 million in SARs for 2011
Mary Callahan Erdoes: CEO Asset Management . Ms. Erdoes has been Chief Executive Officer of Asset Management (AM) since 2009. In 2012, Ms. Erdoes continued a focus on priorities that included maintaining strong financial and investment performance, growing AM’s client franchise, investing in technology to support growth and achieve efficiencies, maintaining strong risk controls, and developing and retaining talent.
Three important financial measures for Asset Management are revenue growth, pretax earnings margin and ROE.
For 2012, AM achieved record revenues of $9.9 billion, a 4% increase over 2011 and the fourth consecutive year of growth.
AM achieved an ROE of 24% and a pretax earnings margin of 28%.
At the end of 2012, assets under management (“AUM”) in the top two fund quartiles were 67%, 74% and 76%, respectively, over a 1-, 3- and 5-year time period.
AM showed strong growth in long-term AUM flows, loan balances and deposit balances.
Continued investments were made in the technology infrastructure to support both the growth and control agendas.

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In consideration of the above, the Committee approved the following compensation:
$750,000 in base salary, no increase in 2012 or for 2013
A $4.9 million cash incentive for 2012, compared to $4.7 million for 2011
An RSU award of $7.35 million, compared to $7.05 million for 2011
A SAR award of $2.0 million, unchanged from 2011
Daniel Pinto: Co-CEO Corporate & Investment Bank. Mr. Pinto became Co-Chief Executive Officer of the Corporate & Investment Bank (“CIB”) in July 2012 and has been Chief Executive Officer of Europe, the Middle East and Africa since June 2011. He had been head or co-head of the Investment Bank Global Fixed Income business (now part of Corporate & Investment Bank) from November 2009 until July 2012. He was Global Head of Emerging Markets from 2006 until 2009, and was also responsible for the Global Credit Trading & Syndicate business from 2008 until 2009.
In 2012, the Corporate & Investment Bank was created from the combination of the heritage Investment Bank and Treasury Services & Securities businesses and has outlined a number of strategic priorities that reflect the continuation of the agenda of each business as well as several new priorities that are driven by the business combination. These include international expansion, particularly for the Global Corporate Bank and Treasury Services solutions, global Prime Brokerage build-out, electronic trading investments, and optimizing its client coverage model across both Banking and Markets & Investor Services. In addition, the CIB will continue to be focused on expense discipline and prudent management of its risk-weighted assets and capital. As Co-CEO of CIB, Mr. Pinto has played a strategic role in integrating the business and setting the course for achieving CIB’s multi-year priorities. Among the achievements in 2012 for CIB were the following:
Delivered net income of $8.4 billion on revenue of $34.3 billion.
Helped clients raise $500 billion of debt and equity capital
Led the market in arranging $650 billion of loans and commitments for clients
Ranked #1 in Global IB Fees and #1 in Fixed Income Markets revenue
Ranked #1 in All American Fixed Income and Equity Research
#1 USD wire clearer with 20% share of Fed and CHIPS
Record in Assets under Custody of $18.8 trillion, up 12% from the prior year
Continuing to extend the Firm’s international presence and execute our strategic technology reengineering program
In consideration of the above, the Committee approved the following compensation with the terms and composition structured to reflect applicable U.K. standards as described at page 23 :
$750,000 in base salary, no increase in 2012 or for 2013
An $8.125 million cash incentive for 2012
An RSU award of $7.125 million
A SAR award of $1.0 million
Matthew Zames: Co-Chief Operating Officer. Mr. Zames demonstrated leadership and risk management discipline in 2012. He held three key roles this year, prior to which he had served with distinction in a number of senior Investment Banking management roles. First, from January to May 2012, he was the head of Mortgage Banking Capital Markets, which he continues to lead, and co-head of Global Fixed Income in the Investment Bank.
Fixed Income Markets reported revenue of $5.0 billion in the first quarter of 2012, which ranked #1 in revenue versus its top 10 peers
Mortgage Capital Markets distributed more than $160 billion of closed loan volume to investors in support of record Mortgage Banking production; 2012 pre-tax income of $3.6 billion
Led the acquisition of a $71.4 billion mortgage servicing portfolio
In May of 2012, Mr. Dimon asked Mr. Zames to become the Chief Investment Officer of the Firm following trading losses in CIO. Mr. Zames led the successful de-risking of the Synthetic Credit Portfolio and refocused CIO on its core mandate of conservative investing of its portfolio and asset and liability management. He brought in a new, highly

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experienced CIO management team, including a Chief Risk Officer, Chief Financial Officer, Controller, and head of Europe.
In mid-July 2012, with CIO repositioned, Mr. Zames was promoted to a newly created role of Co-Chief Operating Officer. In addition to CIO and Mortgage Banking Capital Markets, he oversees Treasury & Funding, Strategy, One Equity Partners, Regulatory Affairs and joint management of Oversight & Controls and Compliance across the Firm. As Co-Chief Operating Officer, he also contributes to a variety of key firmwide initiatives. In addition to his impact on CIO and in Mortgage Capital Markets, his accomplishments as Co-Chief Operating Officer include:
Centralizing the Firm’s Controls and Compliance organization to respond to incoming regulatory inquiries and develop a strong control environment across the Firm
Leading a firmwide initiative to reduce expenses
Hiring new talent within the Chief Operating Office
In consideration of the above, the Committee approved the following compensation:
$750,000 in base salary, no increase in 2012 or for 2013
A $6.1 million cash incentive for 2012
An RSU award of $9.15 million
A SAR award of $1.0 million


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2012 Compensation
The following table shows annual salary in 2012 and incentive compensation awarded in 2013 for 2012 performance, which reflects the Compensation & Management Development Committee’s view of compensation determinations for 2012 and is guided by our core compensation philosophy and approach.
Salary and incentive compensation
 
 
 
 
 
 
 
 
Name and principal position
 
Year
 
Annual compensation
        Salary ($) 1

 
Incentive compensation
 
 
     Cash ($)

 
        RSUs ($) 2

 
         SARs ($) 3

 
  Total ($)

James Dimon
 
2012
 
$
1,500,000

 
$
0

 
$
10,000,000

 
$
0

 
$
11,500,000

Chairman and CEO
 
2011
 
1,500,000

 
4,500,000

 
12,000,000

 
5,000,000

 
23,000,000

 
 
2010
 
1,000,000

 
5,000,000

 
12,000,000

 
5,000,000

 
23,000,000

Douglas L. Braunstein
 
2012
 
750,000

 
2,125,000

 
2,125,000

 
0

 
5,000,000

Vice Chairman (Former Chief Financial Officer)
 
2011
 
750,000

 
2,900,000

 
4,350,000

 
1,500,000

 
9,500,000

 
2010
 
400,000

 
3,840,000

 
5,760,000

 
2,016,900

 
12,016,900

Mary Callahan Erdoes
 
2012
 
750,000

 
4,900,000

 
7,350,000

 
2,000,000

 
15,000,000

CEO Asset Management
 
2011
 
750,000

 
4,700,000

 
7,050,000

 
2,000,000

 
14,500,000

 
 
2010
 
500,000

 
4,600,000

 
6,900,000

 
3,025,400

 
15,025,400

Daniel E. Pinto 4,5
 
2012
 
750,000

 
8,125,000

 
7,125,000

 
1,000,000

 
17,000,000

Co-CEO Corporate & Investment Bank
 
 
 
 
 
 
 
 
 
 
 
 
Matthew E. Zames 4
 
2012
 
750,000

 
6,100,000

 
9,150,000

 
1,000,000

 
17,000,000

Co-Chief Operating Officer
 
 
 
 
 
 
 
 
 
 
 
 
1
Salary reflects the annualized amounts as of December 31 for each year.
2
For all Named Executive Officers, except Mr. Pinto, the RSUs granted for 2012 vest in two equal installments on January 13, 2015 and January 13, 2016. Each RSU represents the right to receive one share of common stock on the vesting date and non-preferential dividend equivalents, payable in cash, equal to any dividends paid during the vesting period. RSUs have no voting rights. Additional conditions applicable to these awards are described at page 27 . For Mr. Pinto, see note 5 to this table.
3
The Firm awarded SARs to the Named Executive Officers, effective January 17, 2013, with an exercise price of $46.58. The SARs will become exercisable 20% per year over the five-year period from January 17, 2013. All shares obtained upon exercise must be held until the fifth year after grant and are subject to the Firm’s stock retention requirement. The SARs had a grant date fair value of $9.56 per SAR. Assumptions under the Black-Scholes valuation model were used to determine grant date fair value. Additional conditions applicable to these awards are described at page 27 .
4
Mr. Pinto and Mr. Zames were not Named Executive Officers in either 2011 or 2010.
5
For Mr. Pinto, the terms and composition of his compensation reflects applicable U.K. standards. Under rules applicable in the U.K., a portion (60%) of Mr. Pinto’s cash bonus shown in this table was deferred, with half of the deferred amount payable at the end of 18 months and the balance payable at the end of three years. Such mandatory deferral is subject to terms and conditions similar to those for RSUs. Until paid, such amounts accrue interest. For Mr. Pinto, $3,250,000 of the RSUs granted for 2012 vest immediately and the balance vests in two equal installments, on July 25, 2014, and January 13, 2016. All of such RSUs must be held for not less than six months following vesting.
The above table is presented to show how the Compensation & Management Development Committee viewed compensation actions, but it differs substantially from the Summary Compensation Table (“SCT”) required by the SEC and is not a substitute for the information required by the SCT at page 30 .
The SCT shows compensation information in a format required by the SEC. There are two principal differences between the SCT and the above table:
The Firm grants both cash and equity incentive compensation after the earnings for a performance year have been announced. In both the above table and the SCT, cash incentive compensation granted in 2013 for 2012 performance is shown as 2012 compensation. The above table treats equity awards similarly, so that equity awards granted in 2013 for 2012 performance are shown as 2012 compensation. The SCT does not follow this treatment and instead reports the value of equity awards in the year in which they are made. As a result, equity awards granted in 2013 for 2012 performance are shown in the above table as 2012 compensation, but the SCT reports for 2012 the value of equity awards granted in 2012 in respect of 2011 performance.
The SCT reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not shown above.

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Advisory resolution to approve executive compensation
Proposal 3 is an annual advisory resolution to approve executive compensation, and the Board recommends that shareholders vote for approval of this resolution. Shareholders approved similar resolutions in 2009, 2010, 2011 and 2012 by votes of 97%, 96%, 73% and 92%, respectively, in each case as a percentage of shares cast including abstentions. We believe the result in 2011 was attributable to a recommendation by a proxy advisory firm that cited as a key reason for its recommendation the discretionary nature of the Firm’s executive compensation program.
The Compensation & Management Development Committee has considered making a portion of incentive awards for the CEO and other members of the Operating Committee formulaic, based on pre-set targets, but believes that:
Its current approach provides a disciplined assessment of multi-year priorities and achievements and has resulted in proper alignment of compensation and performance, and
There is a greater risk of misaligning incentives and creating unintended consequences with a formulaic approach than the current approach of carefully considering a broader spectrum of factors relative to overall performance. We believe history has shown there are as many disadvantages to shareholders as advantages to formulaic pay plans.
Although awards are not made on a formulaic basis, starting in 2012, the Firm added to the terms of RSU awards to members of the Operating Committee and other Tier 1 employees certain protection-based vesting conditions described at page 27 that add specific numerical thresholds that will result in formal compensation reviews and are designed to be effective in the event of material losses or earnings substantially below the Firm’s potential.
The Compensation & Management Development Committee further notes that the compensation decisions made for 2012 in respect of the Firm’s CEO and CFO illustrate the effectiveness of the Firm’s disciplined but not formulaic process of assessment based on the performance of the individual employee, relevant line of business or function and the Firm as a whole. In each case, significant compensation action was taken despite the very strong results of each of the Firm’s lines of business and for the Firm as a whole because of the events associated with the losses in the CIO.
The Firm conducts twice-annual outreach discussions with its major shareholders on compensation and other governance matters and considers shareholder views expressed in those discussions as well as the results of the say on pay and other shareholder input.
 
Compensation framework
Corporate governance and Board oversight - JPMorgan Chase’s compensation framework is supported by strong corporate governance and board oversight.
The Board of Directors, through the Compensation & Management Development Committee, oversees our compensation programs, including the overall incentive pools, percentage paid in cash and stock, and the equity award terms and conditions.
The Compensation & Management Development Committee approves compensation for members of the Operating Committee, and for the CEO makes a recommendation to the Board for its ratification. No member of the Operating Committee other than the CEO (as described at page 18 ) has a role in making a recommendation to the Compensation & Management Development Committee as to the compensation of any member of the Operating Committee.
In addition to approving compensation for Operating Committee members, the Compensation & Management Development Committee approves the formula, pool calculation and performance goals for the shareholder-approved Key Executive Performance Plan (“KEPP”) as required by Section 162(m)(1) of the U.S. Internal Revenue Code. The Compensation & Management Development Committee does not require all compensation to be awarded in a tax-deductible manner, but it is their intent to do so when consistent with overall corporate objectives.
The Compensation & Management Development Committee also reviews line of business total incentive accruals versus performance throughout the year, approves final aggregate incentive funding, and approves total equity grants under the Firm’s long-term incentive plan and the terms and conditions for each type of award.
The Compensation & Management Development Committee also reviews the compensation of a number of highly compensated individuals globally, such as employees in the U.K. covered by regulations of the Financial Services Authority, and employees in the U.S. covered by guidance of the Federal Reserve as part of seeking to ensure consistency with applicable regulatory standards in the principal jurisdictions in which we operate.

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The Compensation & Management Development Committee each year reviews the Firm’s compensation programs with the Chief Risk Officer with the objective of ensuring that such compensation programs do not encourage unnecessary or excessive risk-taking. The Compensation & Management Development Committee also meets at least annually with one or more members of the Risk Policy Committee.
The Compensation & Management Development Committee has delegated authority to the Head of Human Resources Officer to administer and amend the compensation and benefits programs.
Internal Audit conducts regular, independent audits of the Firm’s compliance with its established policies and controls and applicable regulatory requirements regarding incentive compensation management. Audit findings are reported to appropriate levels of management, and all adversely-rated audits are reported to the Audit Committee of the Board of Directors.
Relevant competitor framework - The Compensation & Management Development Committee views benchmarking against comparison groups to compare our compensation to the market, to stay abreast of best practices, to be competitive and to use these market factors to inform, but not override, the focus on pay for performance and internal equity.
The Compensation & Management Development Committee reviews and selects peer companies that either directly compete with us for business and/or talent or are global organizations in other industries with scope, size or other business and financial characteristics similar to JPMorgan Chase.
The Compensation & Management Development Committee does not target or benchmark compensation at any specific percentile or level paid by other companies, but rather considers compensation, including actual compensation levels typically available from public data provided by Human Resources management, among other factors when making determinations.
Because we view our executive officers as highly talented executives capable of rotating among the leadership positions of our businesses and key functions, we also place importance on the internal pay relationships among members of our Operating Committee.
The Compensation & Management Development Committee and Board of Directors did not engage the services of a compensation consultant in 2012; rather, the Firm’s Human Resources department provides the Compensation & Management Development Committee with both internal and external compensation data publicly available and from outside consultants, and updates throughout the year.
As part of benchmarking we consider companies in two different peer frames:
Primary, industry specific, competitor group:
American Express
Goldman Sachs
Bank of America
Morgan Stanley
Citigroup
Wells Fargo
General industry global organizations:
Altria
GE
Pfizer
Boeing
Hewlett-Packard
Procter & Gamble
Chevron
IBM
Time Warner
Cisco
Johnson & Johnson
United Technologies
Comcast
Merck
Walmart
Disney
Oracle
3M
ExxonMobil
Pepsico
 
Due to our business model and diverse operations of our various lines of business, other firms considered for comparison by our LOBs are Barclays, BNY Mellon, Capital One Financial, Credit Suisse, Deutsche Bank, HSBC, BlackRock and UBS.
Integrated risk, compensation and financial management framework – We approach our incentive compensation arrangements through an integrated risk, compensation and financial management framework to encourage a culture of risk awareness and personal accountability.

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Our approach to financial measurement is based on two key principles:
Earnings recognition, where appropriate, reflects the inherent risks of positions taken to generate profits.
All LOBs are measured with earnings and balance sheets as though they were stand-alone companies. This approach is reflected in arms-length agreements and market-based pricing for revenue sharing among businesses, funds transfer pricing, expense allocations and capital allocations.
Integrating risk with the compensation framework – We use balancing mechanisms, such as risk-adjusted metrics, deferrals, clawbacks and multi-year year vesting on long-term incentives to seek to ensure that compensation considers the relationship of near-term rewards to longer-term risks.
The use of risk-adjusted financial results in compensation arrangements seeks to ensure that longer-term risks are first quantified and then applied in current-year incentives. Therefore for certain risk, credit and other senior employees, incentive compensation in the current year would be appropriately affected by a number of factors, such as capital charges, valuation adjustments, reserving, and other factors resulting from the consideration of long-term risks.
Stringent recovery provisions are in place for incentive awards (cash and equity incentive compensation).
As part of our control processes, compensation of risk and control professionals is not predominantly based on the performance of the business they oversee.
Pay mix – Our compensation structure is designed to contribute to the achievement of the Firm’s short-term and long-term strategic and operational objectives, while avoiding excessive risk-taking inconsistent with the Firm’s risk management strategy. This is accomplished in part through a balanced total compensation program comprised of a mix of fixed pay (base salary) and variable pay in the form of cash incentives and long-term, equity-based incentives that vest over time. Incentives are split between cash and deferred equity. The percentage of equity being deferred and awarded is higher for more highly compensated employees, thus increasing the aggregate value subject to the continued performance of the Firm’s stock.
We also believe that providing the appropriate level of salary and annual cash incentive is important in ensuring that our senior officers are not overly focused on the short-term performance of our stock.
The majority of compensation plans at JPMorgan Chase address potential timing conflicts by including payment deferral features. Awards that are deferred into equity have multi-year vesting. By staggering the vesting of equity awards over time, the interests of employees to build long-term, sustainable performance (i.e., quality earnings) are better aligned with the long-term interests of both customers and shareholders.
Equity grant practices Equity grants are awarded as part of the annual compensation process and as part of employment offers for new hires.
Equity-based incentives for the majority of senior managers are granted in the form of RSUs and SARs.
RSU grants generally vest over three years, 50% after two years and 50% after three years or in accordance with applicable U.K. standards. RSUs carry no voting rights; however, dividend equivalents are paid on the RSUs at the time actual dividends are paid on shares of JPMorgan Chase common stock.
SARs become exercisable 20% per year over five years and any shares received upon exercise must be held for not less than five years from the grant date.
The grant price is not less than the average of the high and the low prices of JPMorgan Chase common stock on the grant date.
Grants made as part of the annual compensation process are generally awarded in January after earnings are released.
The Firm does not grant options with restoration rights and prohibits repricing of stock options and SARs.
Required share retention – Share retention policies apply to our directors and members of the Operating Committee.
Directors pledge to retain all shares of JPMorgan Chase while they serve as a director.
Operating Committee members are expected to establish and maintain a significant level of direct ownership. For Mr. Dimon and other members of the Operating Committee, after-tax shares they receive from equity-based awards, including options, are subject to a 75% retention requirement during the first 10 years from grant of the award and 50% thereafter. Half of unvested RSUs (the approximate after tax-equivalent) are included as part of both the ownership and the retention calculation.

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Executives are subject to these retention requirements during their service on the Operating Committee; any exceptions are subject to approval by the General Counsel.
The Firm’s percentage retention requirements result in NEOs being required to hold shares that have a value equal to a substantial multiple of their salaries. For Mr. Dimon, his share ownership, as shown in the Security Ownership table at page 15 , was substantially in excess of his required retention as of that date and his required retention was more than 20 times his base salary.
No hedging –
Operating Committee members and Directors: No hedging of the economic risk of their ownership of our shares is permitted, even for shares owned outright. No short sales, no hedging of unvested RSUs or unexercised options or SARs, and no hedging of deferred compensation.
Other employees: No short sales, no hedging of unvested RSUs or unexercised options or SARs, and no hedging of deferred compensation. If they own shares outright and can sell them, they are permitted to hedge them, subject to compliance with window period policies that restrict transactions in JPMorgan Chase’s shares pending the release of earnings and applicable preclearance rules.
Long-standing recovery provisions – Incentive awards are intended and expected to vest in accordance with their terms but we have strong recovery provisions that would permit recovery of incentive compensation awards in appropriate circumstances. We retain the right to reduce current year incentives to redress any prior imbalance that we have subsequently determined to have existed, and a clawback review or other recovery mechanism may be initiated as a result of a material restatement of earnings or by acts or omissions of employees as outlined below, including a failure to supervise in appropriate circumstances. Beyond the recovery provisions that apply to all employees, additional provisions apply to the Operating Committee and to other Tier 1 employees.
The Firm may seek repayment of cash and equity incentive compensation in the event of a material restatement of the Firm’s financial results for the relevant period under our recoupment policy adopted in 2006.
Equity awards are subject to the Firm’s right to cancel an unvested or unexercised award, and to require repayment of the value of certain shares distributed under awards already vested if:
the employee is terminated for cause or could have been terminated for cause,
the employee engages in conduct that causes material financial or reputational harm,
the Firm determines that the award was based on materially inaccurate performance metrics,
the award was based on a material misrepresentation by the employee, or
for members of the Operating Committee and Tier 1 employees, such employees improperly or with gross negligence fail to identify, raise, or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities.
Protection-based vesting – In 2012, the Firm added provisions in our equity awards for the Operating Committee and other Tier 1 employees that we call protection-based vesting. These provisions were designed to meet requirements of our regulators and to be effective in the event of material losses or earnings substantially below the Firm’s potential that could create substantial financial risk. In 2013, the Firm increased the applicability of the protection-based vesting based on Cumulative Return on Tangible Common Equity, as described below, from 50% to 100% of the RSUs that are scheduled to vest at the end of three years for members of the Operating Committee.
For members of the Operating Committee, up to a combined total of 50% of RSUs granted in 2013 (“at risk RSUs”) may be cancelled if:
(i)  The CEO determines that cancellation of all or portion of at risk RSUs is appropriate in light of any one or a combination of the following factors:
The executive’s performance in relation to the priorities for the executive’s position, or the Firm’s performance in relation to the priorities for which the executive shares responsibility as a member of the Operating Committee, have been unsatisfactory for a sustained period of time (the “performance determination condition”)
Annual pre-provision net income reported at the Firm level is negative for any calendar year ending during the vesting period
Awards granted to participants in a Line of Business, for which the executive exercises, or during the vesting period exercised direct or indirect responsibility, were in whole or in part cancelled because the Line of Business did not meet its annual Line of Business Financial Threshold 

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(ii)  To the extent not cancelled pursuant to the above circumstances, then any remaining at risk RSUs scheduled to vest on January 13, 2016 will be cancelled, absent extraordinary circumstances, if the Firm does not meet a 15% Cumulative Return on Tangible Common Equity over the period 2013, 2014 and 2015 (the sum of the Firm’s reported net income for all three years, divided by reported year-end tangible equity averaged over the three years).
For SARs granted in 2013, unexercisable SARs may be cancelled or deferred if the CEO determines that such action is appropriate under the above performance determination condition. Any determination with respect to these RSU and SAR provisions is subject to ratification by (and for an award to the CEO would be made by) the Compensation and Management Development Committee.
In addition to formal recovery provisions and protection-based vesting, the Compensation & Management Development Committee believes that inappropriate risk-taking is also discouraged by management and compensation practices we have long employed. Employee performance is subject to frequent assessment, and we retain the flexibility to reduce current year incentives. Where warranted, individuals may be terminated for cause and may be required to forfeit unvested awards, with certain previously distributed shares also subject to recovery.
There are no golden parachutes or special severance plans –
No golden parachutes for any executives.
No employment contracts other than occasional exceptions upon hire 1 . No change-in-control agreements.
No special severance programs for Operating Committee members; the Firm’s policy limits severance to a maximum of 52 weeks salary based on years of service.
Equity award terms provide that awards continue to vest on the original schedule, without acceleration and subject to additional restrictions, for employees who have resigned and meet the Firm’s full-career eligibility requirements.
There are no special executive benefits –
No pension credits for incentives.
No 401(k) Savings Plan matching contributions for any senior executive.
No special medical, dental, insurance or disability benefits for executives. The higher an executive’s compensation, the higher the premiums they pay.
No private club dues, car allowances, financial planning, tax gross-ups for benefits.
Voluntary deferred compensation program is limited to a maximum individual contribution of $1 million annually, with a $10 million lifetime cap for cash deferrals made after 2005.
The Firm reports the cost of Mr. Dimon’s personal use of the Firm’s aircraft and cars and the cost of residential security services. The Firm requires such use as a matter of security protection for Mr. Dimon and does not view these items as special executive benefits.
Talent management, development and succession planning – As part of our resolve to focus on long-term sustained value, we look to ensure that we are developing leaders for the future. We have introduced a disciplined process of talent reviews focused on thorough assessments, enhanced executive development programs and rotations of top executives to prepare them for greater responsibility. We are committed to having a strong pipeline to deal with succession for our Operating Committee, including the CEO position. Turnover within the Operating Committee in 2012 was higher than normal due to specific succession planning and executive development objectives set by the Board several years ago, the reorganization of the Firm to better serve our customers and clients, as well as to gain operating efficiencies, and the events of the CIO.
At least annually the independent directors make an evaluation of the Chairman and Chief Executive Officer, normally in connection with a review of executive officer annual compensation. Succession planning is also considered at least annually by the independent directors with the Chief Executive Officer. The Compensation & Management Development Committee regularly discusses management development and provides updates to the full Board.



____________________
1
Some jurisdictions outside the U.S. require that employees be provided a document that sets out the basic terms of that employment which may be referred to as an employment agreement.

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Compensation & Management Development Committee report
The Compensation & Management Development Committee has reviewed the Compensation Discussion and Analysis and discussed that analysis with management.
Based on such review and discussion with management, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2012. This report is provided as of March 19, 2013, by the following independent directors, who comprise the Compensation & Management Development Committee:
Lee R. Raymond (Chairman)
Stephen B. Burke
William C. Weldon

The Compensation Discussion and Analysis is intended to describe our 2012 performance, the compensation decisions for our Named Executive Officers and the Firm’s philosophy and approach to compensation. The following tables at pages 30-36 present additional information required in accordance with SEC rules, including the Summary compensation table.

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Executive compensation tables
The following tables and related narratives present the compensation for our Named Executive Officers in the format specified by the SEC. The below table does not reflect equity awards made in 2013 for 2012 performance. The table of Salary and incentive compensation at page 23 shows how the Compensation & Management Development Committee viewed compensation actions.
I. Summary compensation table (SCT)
Name and principal position
Year
 
Salary ($) 1

 
Bonus ($) 2

 
Stock
awards ($) 3

 
Option awards ($) 3

 
Change in
pension value
and non-
qualified
deferred
compen-sation
earnings ($)   4

 
All other
compen-
sation ($)

 

Total ($)

James Dimon
2012
 
$
1,500,000

 
$
0

 
$
12,000,000

 
$
5,000,000

 
$
46,993

 
$
170,020

5  
$
18,717,013

Chairman and CEO
2011
 
1,416,667

 
4,500,000

 
12,000,000

 
5,000,000

 
45,471

 
143,277

 
23,105,415

 
2010
 
1,000,000

 
5,000,000

 
7,952,400

 
6,244,300

  
39,965

 
579,624

  
20,816,289

Douglas L. Braunstein 
2012
 
750,000

 
2,125,000

 
4,350,000

 
1,500,000

 
1,812,984

 
0

 
10,537,984

Vice Chairman (Former Chief Financial Officer)
2011
 
720,833

 
2,900,000

 
5,760,000

 
2,016,900

 
1,640,092

 
0

  
13,037,825

2010
 
383,333

 
3,840,000

 
10,080,000

 
934,100

  
1,431,272

 
0

 
16,668,705

Mary Callahan Erdoes
2012
 
750,000

 
4,900,000

 
7,050,000

 
2,000,000

 
45,836

 
0

 
14,745,836

CEO Asset Management
2011
 
729,167

 
4,700,000

 
6,900,000

 
3,025,400

 
38,352

 
0

 
15,392,919

2010
 
483,333

 
4,600,000

 
4,677,900

 
1,101,900

 
29,485

 
0

 
10,892,618

Daniel E. Pinto 6,7
2012
 
751,631

 
8,125,000

8  

7,145,400

 
730,000

 
0

 
257,766

9  

17,009,797

Co-CEO Corporate & Investment Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Matthew E. Zames 6
2012
 
750,000

 
6,100,000

 
9,012,000

 
730,000

 
12,301

 
0

 
16,604,301

Co-Chief Operating Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Salary reflects the actual amount paid in each year.
2
Includes amounts awarded, whether paid or deferred. Cash incentive compensation reflects compensation for the period presented, which was awarded in the following year.
3
Includes amounts awarded during the year shown. Amounts are the fair value on the grant date (or, if no grant date was established, on the award date). The Firm’s accounting for employee stock-based incentives (including assumptions used to value employee stock options and SARs) granted during the years ended December 2012 , 2011 and 2010 is described in Note 10 to the Firm’s Consolidated Financial Statements in the 2012 Annual Report at pages 241–243 .
4
Amounts are the aggregate change in the actuarial present value of the accumulated benefits under all defined benefit and actuarial pension plans (including supplemental plans) for the respective years shown. Amounts shown also include earnings in excess of 120% of the applicable federal rate on deferred compensation balances where the rate of return is not calculated in the same or in a similar manner as earnings on hypothetical investments available under the Firm’s qualified plans: Mr. Braunstein, $1,580,231, $ 1,431,889 and $1,296,173, in 2012, 2011 and 2010, respectively.
5
The All other compensation column for Mr. Dimon includes: $64,437 for personal use of aircraft; $37,113 for personal use of cars; $68,379 for the cost of residential and related security paid by the Firm; and $91 for the cost of life insurance premiums paid by the Firm (for basic life insurance coverage equal to one times salary up to a maximum of $100,000, which program covers all benefit-eligible employees).
Incremental costs are determined as follows:
Aircraft: operating cost per flight hour for the aircraft type used, developed by an independent reference source, including fuel, fuel additives and lubricants; landing and parking fees; crew expenses; small supplies and catering; maintenance, labor and parts; engine restoration costs; and a maintenance service plan.
Cars: annual lease valuation of the assigned cars; annual insurance premiums; fuel expense; estimated annual maintenance; and annual drivers’ compensation, including salary, overtime, benefits and bonus. The resulting total is allocated between personal and business use based on mileage.
6
Mr. Pinto and Mr. Zames were not Named Executive Officers in 2011 and 2010.
7
Mr. Pinto is located in London and his annual salary is designated as £475,000, paid monthly. The blended applicable spot rate used to convert Mr. Pinto’s salary to U.S. dollars for the twelve months in 2012 was 1.58238 U.S. dollars per pound sterling.
8
Under rules applicable in the U.K., a portion (60%) of Mr. Pinto’s cash bonus shown in this table was deferred, with half of the deferred

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amount payable at the end of 18 months and the balance payable at the end of three years. Such mandatory deferral is subject to terms and conditions similar to those for RSUs. Until paid, such amounts accrue interest.
9
The All other compensation column for Mr. Pinto includes: $21,433 in employer contributions to a non U.S. defined contribution plan and $236,333 for interest accrued on balances from mandatory bonus deferrals prior to 2013. During 2012, the applicable rate of interest on mandatory deferral balances was 2.75% for the first six months and 2.17% for the last six months of 2012.
II. 2012 Grants of plan-based awards 1
The following table shows grants of plan-based awards made in 2012 for the 2011 performance year.
Name
Grant date
 
Approval
date
 
Stock awards
 
Option awards
 
Grant date fair
value ($)

 
Number of
shares of
stock or
units (#) 2

 
Number of
securities
underlying
options (#)  3

 
Exercise
price
($/Sh)

 
Closing price on option grant date
($/Sh)

 
James Dimon
1/18/2012
 
1/17/2012
 
337,032

 


 


 
 
 
$
12,000,000

 
1/18/2012
 
1/17/2012
 


 
562,430

 
$
35.61

 
$
36.54

 
5,000,000

Douglas L. Braunstein
1/18/2012
 
1/17/2012
 
122,174

 


 
 
 
 
 
4,350,000

 
1/18/2012
 
1/17/2012
 


 
168,729

 
35.61

 
36.54

 
1,500,000

Mary Callahan Erdoes
1/18/2012
 
1/17/2012
 
198,006

 


 
 
 
 
 
7,050,000

 
1/18/2012
 
1/17/2012
 


 
224,972

 
35.61

 
36.54

 
2,000,000

Daniel E. Pinto
1/18/2012
 
1/17/2012
 
200,684

 


 


 
 
 
7,145,400

 
1/18/2012
 
1/17/2012
 


 
82,115

 
35.61

 
36.54

 
730,000

Matthew E. Zames
1/18/2012
 
1/17/2012
 
253,111

 


 
 
 
 
 
9,012,000

 
1/18/2012
 
1/17/2012
 


 
82,115

 
35.61

 
36.54

 
730,000

1
Effective January 17, 2013, the Firm awarded RSU awards and stock-settled SARs as part of the 2012 annual incentive compensation. Because these awards were granted in 2013, they do not appear in this table, which is required to include only equity awards actually granted during 2012. These awards are reflected in the “Salary and incentive compensation” table at page 23 .
2
For all Named Executive Officers except Mr. Pinto, the RSUs vest in two equal installments on January 13, 2014 and 2015. For Mr. Pinto, 84,374 RSUs vested on the grant date, 58,155 RSUs vest on July 25, 2013 and 58,155 RSUs vest on January 13, 2015; these RSUs are subject to a 6-month hold period post-vesting. Each RSU represents the right to receive one share of common stock on the vesting date and non-preferential dividend equivalents, payable in cash, equal to any dividends paid during the vesting period. RSUs have no voting rights.
3
These SARs will become exercisable 20% per year over the five-year period from the date of grant. Shares resulting from exercise must be held at least five years from the grant date.


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III. Outstanding equity awards at fiscal year-end 2012
The following table shows the number of shares of the Firm’s common stock underlying (i) exercisable and unexercisable stock options and SARs and (ii) RSUs that had not yet vested held by the Firm’s Named Executive Officers on December 31, 2012.
 
 
Option awards
 
Stock awards
 
Name
 
Number of
securities
underlying
unexercised
options: #
exercisable
1

 
Number of
securities
underlying
unexercised
options: #
unexercisable 1

 
Option
exercise
price ($)

 
Option
expiration
date
 
Option grant
date 2
 
Number of
shares or
units of 
stock that have not 
vested (#)

 
Market value
of shares or
units of stock
that have not
vested ($) 1

 
Stock award
grant date 2
 
James Dimon
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600,481

 

 
$
37.47

 
1/20/2015
 
1/20/2005
a  

 

 


 
 

 
2,000,000

 
39.83

 
1/22/2018
 
1/22/2008
b  

 

 


 
 
225,424

 
338,138

 
43.20

 
1/20/2020
 
2/3/2010
c  
97,852

 

 
2/3/2010
a  
 
 
73,475

 
293,902

 
47.73

 
2/16/2021
 
2/16/2011
c  
251,415

 

 
2/16/2011
a  
 
 

 
562,430

 
35.61

 
1/18/2022
 
1/18/2012
c  
337,032

 


 
1/18/2012
a  
Total awards (#)
 
899,380

 
3,194,470

 

 

 


686,299

 
$
30,176,567

 


Market value of in-the-money options ($)
 
$
4,076,703

 
$
13,242,281

 

 

 



 
 
 


Douglas L. Braunstein