By Manya Saini and Nupur Anand
(Reuters) -JPMorgan Chase's board identified potential successors to CEO Jamie Dimon, paving the way for a leadership transition at the largest U.S. bank.
The board is "spending significant time on developing operating committee members who are well-known to shareholders as strong potential CEO candidates" in the medium term, it said in a proxy statement.
Dimon, 68, has run JPMorgan for more than 18 years and become one of the most influential figures in American business.
Contenders for the top job include Jennifer Piepszak and Troy Rohrbaugh, recently appointed co-CEOs of JPMorgan's expanded commercial and investment bank, Marianne Lake, CEO of consumer and community banking, and Mary Erdoes, CEO of asset and wealth management.
Succession is in focus across Wall Street, with new CEOs taking over at Morgan Stanley and Lazard (NYSE:LAZ) in recent months. Other banks have rotated executives around divisions to give them a more well-rounded experience.
Last May, Dimon signaled he could depart in 3-1/2 years.
JPMorgan has gradually built the dialogue around succession since Dimon had emergency surgery in March 2020, said Chris Marinac, director of research at financial adviser Janney Montgomery Scott.
"However, I don't think that this means that Dimon is leaving tomorrow, he could be here for a few more years," Marinac said.
Brian Mulberry, a client portfolio manager at Zacks Investment Management, predicted Dimon would leave within five years. Mulberry holds stock in JPMorgan and other large banks.
"Considering the increased discussion and disclosures around succession, the target date in my mind has to be within two to five years," Mulberry said. "Otherwise you wouldn't be having these types of letters, disclosures, discussions very publicly," he said, calling the approach prudent.
Meanwhile, JPMorgan's President and Chief Operating Officer Daniel Pinto was cited by the board as the executive who could step in for the CEO in the near term, as he did in 2020 when Dimon had emergency heart surgery.
"Should the need arise in the near-term, we view Mr. Pinto as a key executive who is immediately ready to fulfill the responsibilities of the CEO," the statement said.
Piepszak and Lake are widely seen as the likely front runners, Scott Siefers, an analyst at Piper Sandler, wrote in a January note.
Piepszak has a slight edge, given the investment bank will be the key driver of revenue growth over the next two years, Mulberry said. "The CEO of that business is more likely to succeed Dimon," he added.
In her nearly three decades at JPMorgan, Piepszak served as its finance chief from 2019 to 2021, and ran card services and business banking. The executive also spent 17 years climbing the ranks in investment banking.
Lake, a two-decade veteran of the bank, previously served as finance chief from 2013 to 2019. She leads the consumer division that accounts for the bank's largest chunk of revenue, bringing in $18 billion in the fourth quarter.
The two women were among the executives in charge of integrating failed First Republic Bank (OTC:FRCB) after JPMorgan bought it last year. An elevation of either executive would further diversify Wall Street's top ranks after Jane Fraser at Citigroup became the first woman to lead a major U.S. bank in 2021.
"They definitely have a solid list of top internal candidates, many of whom are female," said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.
Women comprise 28% of JPMorgan's senior leadership globally, Dimon wrote in his annual letter to shareholders on Monday. Its biggest businesses, which are large enough to be Fortune 1000 companies on their own, are run solely or jointly by women.
In the widely-read message to investors, Dimon hailed U.S. leadership and economic power, invoking "liberty and justice for all."
Dimon, who took the reins in 2006, is among a group of financial CEOs whose names have been floated for senior economic roles in government.
The Wall Street Journal last week reported that allies of former U.S. President Donald Trump were considering senior Wall Street executives, including Dimon, for the role of Treasury secretary.
Dimon's compensation climbed about 4.3% to $36 million in 2023. Pinto's total compensation came in at $30 million, while Erdoes was paid $27 million.
Piepszak and Lake each earned $18.5 million in 2023, while Chief Financial Officer Jeremy Barnum earned $15 million.
"Jamie Dimon is irreplaceable," and "has produced extraordinary results for shareholders," said Macrae Sykes, a portfolio manager at Gabelli Funds, which holds shares in the bank.
"JPMorgan will be different after Jamie Dimon, but confidence in the brand, customer engagement and outlook for future shareholder returns shouldn't materially change under new leaders," he added.
The lender also announced that two directors on its board - Timothy Flynn and Michael Neal - have decided to retire when their terms expire on the eve of its 2024 annual meeting of shareholders in May.
JPMorgan's shares closed 0.5% higher. It is set to report first-quarter results on Friday.