JPMorgan Shakes Up the Race to Succeed Jamie Dimon

In a position to succeed?

JPMorgan Chase announced a major management shuffle yesterday, renewing chatter about a hotly debated topic on Wall Street: Who will succeed Jamie Dimon as C.E.O.? The changes may also pave the way for a woman to lead the United States’ largest bank. Here’s the rundown:

• Marianne Lake, the bank’s head of consumer lending, and Jennifer Piepszak, its chief financial officer, will become joint heads of the consumer and community bank, effective immediately.

• Gordon Smith, who has run the bank’s consumer operation since 2012 and served as co-chief operating officer and co-president since 2018, said he would retire at the end of the year.

• Daniel Pinto will become JPMorgan’s sole president and C.O.O. (and remains the head of the corporate and investment bank), and Jeremy Barnum will succeed Piepszak as C.F.O.

The moves solidify Lake and Piepszak as contenders for C.E.O. The executives, both 51, are now in charge of a business that takes in more than $50 billion per year in revenue. In a memo to staff, Dimon praised Lake and Piepszak as “superb executives who are both examples of our extremely talented and deep management bench.” Dimon, 65, took his role as the bank’s C.E.O. in late 2005, making him the longest-tenured big bank chief. “The board has said it would like Jamie to remain in his role for a significant number of years,” Joe Evangelisti, a JPMorgan spokesman, said in a statement.

The new setup creates an unusual situation in which two executives competing for the top job share a leadership role. That may be tricky to navigate, management experts say, and whether it’s a good test of leadership skills is debatable.

Co-management can be hard to pull off. In a 2012 paper, Ryan Krause of the Neeley School of Business at Texas Christian University examined how sharing power impacted the performance of public companies. Estimating the relative power of co-C.E.O.s using proxies such as tenure and stock ownership, he and his co-authors concluded that executives who had more equal levels of power performed worse than those with disproportionate power.

“We interpret this as being evidence that, basically, having co-C.E.O.s really only works if they’re not really co-C.E.O.s,” Krause told DealBook. Co-leaders of a division, he said, may be more successful because they can more easily divide responsibilities instead of sharing authority. Such setups are not uncommon at JPMorgan.

It could highlight the ability to work collaboratively, said Steve Odland, the head of the Conference Board and the former C.E.O. of Office Depot and AutoZone.

“Whenever you’re in a C.E.O. successor position, it’s difficult because there are a lot of things that have to go right and you’re under the microscope,” Odland said. “But to do so with your competitor, and have to compete with your co-head, at the same time you’re making it work is especially stressful. Which is why it’s an interesting test, because the person who succeeds at this should be amply able to succeed in the C.E.O. role.”

Is it a good idea? Dan Ciampa, an adviser to C.E.O.s and directors during leadership transitions, said that he wouldn’t recommend such a test (speaking generally, and not about JPMorgan specifically). “It may make sense to have co-division leaders or co-unit leaders and maybe even co-C.E.O.s,” he said. “But to use that as a way to determine who the next person should be to run the entire organization, to me it says that the board and the sitting C.E.O. and the head of H.R. have probably not done their homework.”

Flashback: One sign of Dimon’s long tenure at JPMorgan is measured by a famous cover of Fortune magazine from Sept. 2008, featuring him and seven of his top lieutenants, headlined “The Survivors.” When Smith retires, Dimon will be the only person on the cover left at the bank.

HERE’S WHAT’S HAPPENING

AT&T investors sour on the WarnerMedia-Discovery deal. Shares in AT&T fell nearly 6 percent yesterday (and are down again premarket today), as shareholders reckoned with the possibility that the spinout of its media arm would expose issues at its core wireless business — and lead to a smaller dividend.

Bank of America will raise its minimum wage to $25 an hour by 2025. The announcement cements the lender’s status as a leader on pay in the banking industry: In 2019, it was one of the first to guarantee a $20 hourly wage, a goal it achieved a year ahead of schedule.

Amazon indefinitely bans the police from using its facial-recognition software. The company extended a moratorium imposed last year amid the nationwide protests over racial injustice and biased policing. Though critics have said that the technology leads to unfair treatment of African-Americans, Amazon has defended the product’s accuracy.

More signs of life in retail. Target reported a 23 percent jump in sales for the first quarter from a year ago, as shoppers returned to stores. It joined Macy’s and Walmart in surpassing analysts’ estimates. Also, a reminder: Most pandemic restrictions in New York City end today.

The criminal investigation into the Trump Organization widens. The office of New York’s attorney general, which has been running a civil inquiry into the Trump family company, joined the Manhattan attorney general’s criminal investigation into potential financial crimes, including tax and bank fraud.

Bitcoin’s wild ride

The largest cryptocurrency’s price is down sharply again today, leaving it 40 percent lower than its mid-April high. (Other cryptocurrencies — even Dogecoin! — are similarly suffering.) As usual, there are a few potential culprits:

• Chinese regulators issued a stern warning to financial institutions (again) not to accept cryptocurrency as payment.

• Elon Musk’s U-turn on Bitcoin is continuing to roil investors’ appetite for the currency.

• Some industry executives said such pullbacks were “normal” in crypto.

That said … Bitcoin is still up more than 30 percent for the year, Ethereum nearly 300 percent and Dogecoin more than 8,000 percent. A lot of investors are feeling plenty flush, for now; more on that below.

“There’s been such an erosion of trust, distrust for government, distrust for the virus, distrust for this party or that party. So when you tell the public what to do, there are people who say, ‘How can I trust the guy without the mask?’”

— Dr. Howard Markel, a medical historian at the University of Michigan, on how the new mask guidelines from the C.D.C. have created a complicated vaccination honor code.

The business case for better care policies

JPMorgan Chase, McDonald’s, Spotify, Uber and almost 200 other businesses announced today that they have formed a coalition focused on “reimagining” the United States’ “caregiving infrastructure.” The coalition, called the Care Economy Business Council, is a strong signal that fixing the crumbling care systems for children and older people is essential to the economic recovery.

The new group will pressure Congress to pass policies that enable workers — particularly women — to get back to work. Led by Time’s Up, the advocacy group formed by powerful women in Hollywood, the council is demanding federally funded family and medical leave, affordable child care and care for older relatives, and higher wages for caregiving workers.

• “What I’m seeing now that I have not seen in the many years I’ve been working on this constellation of issues is a realization by employers that they have a stake in this,” said Tina Tchen, the chief executive of Time’s Up.

The pandemic laid bare the caregiving sector’s limits, particularly in child care. Many providers either shuttered or cut back on hours, leaving parents without a reliable and safe space for their children while they worked. That was a major reason that hundreds of thousands of women left the work force in the past year, bringing the female labor participation rate to the lowest level since the 1980s.

For many executives, the crisis made clear that the entire system needed an overhaul, as companies scrambled to cobble together solutions such as flexible work hours and additional child care stipends. The issue is “bigger than something we can solve on our own,” said Christy Pambianchi, the chief human resources officer at Verizon, a member of the council.

• President Biden’s two-part infrastructure plan proposes pumping $425 billion into the child care industry and an additional $400 billion to expand in-home care for older adults and those with disabilities. The plan also offers businesses a tax credit for building child care centers in their workplaces.

Philanthropies bank crypto windfalls

Charities have an inherent interest in cryptocurrencies because, increasingly, their fates are intertwined. Nonprofits benefit from financial windfalls and recently people have been getting rich with crypto.

“There’s no question” that the price of cryptocurrency is linked to the volume of giving, said Joe Huston, the managing director of GiveDirectly, a global aid group. Crypto is volatile, especially lately, but philanthropies have seen consistent growth in digital asset donations over time. Fidelity Charitable reported that crypto giving went from $13 million in 2019 to $28 million in 2020.

• GiveDirectly has seen a “big uptick,” Huston told DealBook. The Twitter founder Jack Dorsey gave the group $12.8 million, the co-founder of the Ethereum platform Vitalik Buterin donated $4.8 million and Elon Musk of Tesla gave “some.” The cryptocurrency exchange FTX donates one percent of its fees and encourages traders to channel returns to charity.

But newfound riches donated in novel ways raise questions. Buterin recently gave $1.2 billion to fund Covid relief efforts in India. The gift was in SHIB, a crypto token named after a Shiba Inu dog that’s a derivative of the onetime joke crypto Dogecoin. These tokens were sent unbidden to Buterin to bolster their value. His approach in giving them away was “impressively lightweight and fast,” Huston said, showing how frictionless crypto-based philanthropy can be. Previously, it was unimaginable to transfer such an enormous sum without an institutional intermediary.

“There are a lot of young people with stupid amounts of money,” said Austin Detwiler, a consultant at American Philanthropic, a consulting firm. Fund-raisers should facilitate giving from this new generation, mindful that “it’s easy to start accepting crypto, but it’s volatile, so have a policy,” he said.

THE SPEED READ

Deals

• Robinhood plans to publicly disclose its I.P.O. filings as soon as next week. (Bloomberg)

• A firm founded by the son of China’s vice premier has reportedly become one of the country’s most aggressive investors in tech companies. (FT)

Politics and policy

• How electric pickups — like the Ford F-150 that President Biden tested yesterday — are a key part of the White House’s infrastructure plans. (NYT)

• The Senate is considering a bill that would pour $120 billion into research in semiconductors and other technologies to counter China’s supply chain dominance. (NYT)

Tech

• The e-commerce lender Klarna, one of Europe’s most valuable tech start-ups, said its decision on a London I.P.O. depends on Britain’s rolling out relaxed fintech rules. (Bloomberg)

• The Financial Conduct Authority, a British regulator, warned 300 fintech start-ups to stop misleading customers by comparing themselves to fully fledged banks. (FT)

Best of the rest

• Demand for WeWork office space has now surpassed prepandemic levels, according to its chairman. (Bloomberg)

• Bill Gates has disclosed over $3 billion in stock transfers to Melinda French Gates since they announced their divorce. (WSJ)

• “Hertz, the Original Meme Stock, Rewards Its True Believers” (WSJ)

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