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The Relationship Between Bidder & Target CEO Compensation And Financial Performance: A Case Study Analysis Of The 2004 Merger Between JPMorgan Chase And Bank One

Ref: fin0008

On January 14 in 2004, a few months after the 47$ billion offer by Bank of America for FleThBet Boston in October 2003, JPMorgan Chase announced to buy the ‘Chicago-based Bank One Corp. for $58 billion in stock - a 14% premium - to create a financial institution second in size only to Citigroup’. On July 1, 2004 the deal was completed as Bank One stockholders received 1.32 shares of JPMorgan Chase common stock. This event has been the most recent ‘mega-merger’ within the US money center banks industry. This industry consolidation has been spurred by the deregulation of financial markets, which allowed Financial Services companies to diversify their product portfolios. Although the deal was called a merger, technically JPMorgan Chase acquired Bank One.  The very unusual fact for this acquisition is that James Dimon who was CEO and Chairman of Bank One at that time, negotiated to become Chief Operating Officer and to overtake William B. Harrison’s position as CEO, two years afterwards (The American Banker, 2004). Furthermore, the deal provided for an even split of the board and senior roles for several Bank One executives.

  • 10,000 words - 50 pages in length
  • Excellent use of literature
  • Excellent in depth analysis
  • Outstanding piece of work

1. Introduction

2. Literature Review

Shareholder value creation through bank mergers & acquisitions
The logic of bank mergers & acquisitions
Economies of scale and scope
Improved efficiency
Managerial self-interest

3. Methodology and Data
Case Study Approach
Executive Pay
Financial Data and Variables
Risk of Bankruptcy
Share price
Limitations of Financial Ratios and Data

4. Empirical Findings
Executive Pay
Risk of Bankruptcy 
Share price

5. Conclusion



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