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JPMorgan’s Dimon faces shareholder advisory vote on $52.6 million retention award

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© Reuters. FILE PHOTO: Jamie Dimon, CEO of JPMorgan Chase, takes part in a panel discussion at Harvard University in Cambridge, Massachusetts, U.S., April 11, 2018. REUTERS/Brian Snyder

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By David Henry and Ross Kerber

NEW YORK (Reuters) – Long-time JPMorgan Chase & Co (NYSE:JPM) Chief Executive Jamie Dimon will find out on Tuesday how shareholders feel about a special $52.6 million stock option award he received to stay on for five more years, which is opposed by two key investor advisory firms.

The extra award dished out in July was the most significant change in Dimon’s annual pay, which faces a non-binding vote at the bank’s online annual meeting.

While say-on-pay votes are only advisory and Dimon, 66, is expected to keep the award regardless, they are closely followed as a test of investors’ attitudes toward executive pay, which have hardened in recent years.

Average support for pay packages at S&P 500 companies was 88.3% in 2021, down from 89.6% in 2020 and 90% in 2019, according to consulting firm Semler Brossy.

JPMorgan has won approval from more than 90% of votes cast in its annual compensation ballots in eight of the last 12 years.

But this year two major advisory firms, from which investors take their cue when voting, have recommended that they vote “no” because of the special award.

The last time both Institutional Shareholder Services Inc and Glass Lewis & Co objected was in 2015. Then, only 62% of votes were cast for JPMorgan’s payouts, according to data firm Insightia.

This year, the firms have criticized Dimon’s new options as lacking performance requirements for vesting.

JPMorgan directors have said that Dimon’s special award “reflects the board’s desire for him to continue to lead the firm for a further significant number of years.”

If Dimon, a billionaire, keeps working at the bank for five years the options will vest, although he could still receive them if he leaves to work for the government or to run for public office.

Stock from the options must be held until 10 years after being granted.

The board said it considered Dimon’s performance, his leadership since 2005 and “management succession planning amidst a highly competitive landscape for executive leadership talent.”

The award was separate from Dimon’s usual annual pay package, which was up 10% to $34.5 million for 2021.

America’s too-big-to-fail banks are following other companies with retention awards to keep their leaders from being lured away by competitors, according to Glass Lewis.

“The result has been another ratcheting up of CEO pay,” Glass Lewis wrote to clients about the upcoming JPMorgan vote.

Goldman Sachs Group Inc (NYSE:GS) also gave some of its top executives special awards last year, including one to CEO David Solomon worth $17 million.

ISS endorsed Goldman’s compensation after concluding that Solomon’s special award is “entirely performance-based” and carries “rigorous” goals for shareholder returns. Last month, 82% of votes cast backed the pay.

Glass Lewis recommended voting against Goldman’s compensation, citing the “excessive sizes” of the awards.

In December, JPMorgan directors also gave a special $27.9 million stock option grant to Daniel Pinto, the bank’s chief operating officer.

JPMorgan’s board described the special awards as “one-time” and that they would not be made on a “regularly recurring basis.”

Stock Markets

Analysis-Rare double whammy hits investors: steep slumps for both stocks and bonds

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© Reuters. FILE PHOTO: A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri/File Photo/File Photo/File Photo

By David Randall and John McCrank

NEW YORK (Reuters) – From meme-stock enthusiasts to retirees, this year’s steep dive for both stocks and U.S. Treasury prices has upended portfolios for individual investors who had enjoyed watching their wealth grow during the historic rally in financial assets early in the coronavirus pandemic in 2020.

Wall Street’s brutal tumble continued on Wednesday, with the worst one-day loss since June 2020 for the S&P 500 . The benchmark index is now down 17.5% from its peak at the start of the year, erasing $499 billion in market value. At one point the S&P was down nearly 20% and on the cusp of confirming a bear market.

Unlike many past market selloffs, this downturn has also slammed U.S. Treasuries prices, pushing up yields, as the Federal Reserve began to reverse the easy money policies that supported the economy during pandemic lockdowns.

Growing more pessimistic, retail traders sold $87 million in equities on net in the past week up to Tuesday, versus a one-year average of $3.3 billion in net buys, according to a note from JPMorgan (NYSE:JPM).

Normally, Treasuries have been considered among the world’s safest investments. But so far in 2022, the ICE (NYSE:ICE) BofA US Treasury Index is down 9.3%, the worst start to the year for Treasuries since 1830 according to Deutsche Bank (ETR:DBKGn). This has slammed investors who counted on the bond market for income and as a buffer against potential stock market losses.

“Most investors have never seen a market environment like this,” said Christine Benz, director of personal finance at Morningstar. “It could get worse before it gets better, and that will really test investors’ patience.”

Many high-flying growth and tech stocks soared during the pandemic, and their steep decline has rattled investors who had bet on them, hoping for the kind of eye-popping rallies seen early last year in GameStop (NYSE:GME) and other so-called meme stocks.

“What I’m seeing is the same thing everyone else is seeing who started 18-to-24 months ago, like, ‘oh, look at all of the green, going up, up, up,’ and then all of a sudden it’s like, ‘oh crud, what is happening?'”, said Alex Rutfield, 29, an engineer in the Boston suburbs who has invested over $50,000 in stocks and ETFs that include internet and robotics firms. He said the value of his portfolio has fallen back to around even.

DOUBLE WHAMMY

The dual selloffs in stocks and bonds have been particularly difficult on individual investors who counted on a mix of stocks and bonds to blunt declines in their portfolios, with stocks ideally rising amid economic optimism and bonds strengthening during turbulent times.

That strategy does not work when stocks and bonds fall in unison. The BlackRock (NYSE:BLK) 60/40 Target (NYSE:TGT) Allocation fund, which follows a standard portfolio technique of keeping 60% of its assets in equities and 40% in fixed income to limit risk, is down nearly 12% since the start of the year, its worst performance since it launched in 2006.

The bulk of the selling in both stocks and bonds has been coming from wealthier and older investors, who are reducing their overall risk exposure, mainly through the selling of mutual funds, according to data from Vanda (NASDAQ:VNDA) Research.

Bruce Bagley, 69, founder Santa Rosa Uniform & Career Apparel in Santa Rosa, California, said he has held the course so far in his portfolio, which is 55% stocks, 40% bonds, with the rest in cash, even though everything but his REIT investments have been falling.

“Where else are you going to put your money?” he said.

Investors who had large allocations to bonds, which make up some 20% of retirement accounts on average, according to Morningstar, have canceled vacation plans, are eating in more often, and have reconsidered assistance to other family members, said Melanie Nichols, a wealth advisor at WA Asset Management in Birmingham, Alabama.

“When you have one part of a portfolio that is providing all your income and now you see it down 10% that’s frightening,” she said. “People are not used to those returns because we don’t have those returns in the bond market very often.”

Other retirees are looking for other sources of income to try to rebuild their nest egg.

“You think you have enough to live off for years and now you don’t know if it will come back,” said one 73-year old former marketing executive in the Cleveland suburbs who had about 30% of her portfolio in bonds and said she was considering finding part-time work to help preserve her retirement savings.

“Clients who had larger allocations to bonds and who really did not want to experience volatility are feeling this, and it has been very destabilizing for those folks,” said John Cunnison, chief investment officer at Baker Boyer in Walla Walla, Washington.

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Woodside shareholders approve BHP petroleum merger

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© Reuters. FILE PHOTO: The logo for Woodside Petroleum, Australia’s top independent oil and gas company, adorns a promotional poster on display at a briefing for investors in Sydney, Australia, May 23, 2018. REUTERS/David Gray/File Photo

By Sonali Paul

BRISBANE (Reuters) -Shareholders in Woodside (OTC:WOPEY) Petroleum approved on Thursday a merger with BHP Group (NYSE:BHP)’s petroleum arm to create a top 10 global independent oil and gas producer worth $40 billion, according to proxy votes shown at the company’s annual meeting.

More than 97% of proxy and direct votes received were in favour of the deal.

The merger, agreed last August, advances top global miner BHP’s effort to move away from fossil fuels as it looks to decarbonise, while doubling Woodside’s oil and gas production and beefing up its funding for growth.

“The merger is an opportunity for Woodside to increase its contribution to the world’s growing energy needs and build the scale, resilience and diversity to thrive through the energy transition,” Woodside Chief Executive Officer Meg O’Neill told shareholders.

BHP will be paid in Woodside shares, giving BHP investors a 48% stake in the merged group, which will have assets in Australia, the United States, Mexico, Senegal and Trinidad.

Woodside shareholders also approved a change of the company’s name to Woodside Energy Group Ltd.

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Singapore Airlines sees no big growth risk from Boeing 777X delays

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© Reuters. FILE PHOTO: A woman walks past a Singapore Airlines (SIA) logo at a ticketing booth at Changi airport in Singapore May 14, 2013. REUTERS/Edgar Su

(Reuters) -Singapore Airlines Ltd (SIA) does not expect its growth plans to take a major hit because Boeing (NYSE:BA) Co pushed back the date for delivery of its first 777X planes, the carrier’s chief executive said on Thursday.

Last month, Boeing confirmed a delay to 2025 in handing customers the first 777X jet from a prior target of late in 2023, but said it retained confidence in the programme.

Before the delays, SIA had expected to receive by the end of 2023 the first of the 31 777X planes it has on order, Chief Executive Goh Choon Phong told analysts and media.

“At the moment I don’t think that our growth plan will be severely hampered,” he said.

“We do have some flexibility in terms of making up for any potential loss of capacity,” he said, referring to the airline’s fleet plan.

The comments came after the carrier posted on Wednesday a narrower annual loss of S$962 million ($693.63 million) for the 12 months ended March 31, including second-half operating profit of S$10 million as border curbs eased and passenger numbers rose.

SIA said passenger capacity would average about 61% of pre-pandemic levels in the first quarter and 67% in the second quarter of the current financial year.

($1=S$1.3869)

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