Deconstructing Jamie Dimon's letter to shareholders

Given that Jamie Dimon published his opus to shareholders last week, we're a little behind on this.

However, as most of the coverage so far has focused on Dimon's defence of big banking (a coherent, yet flawed argument which renders him the most dangerous man in America according to Baseline Scenario), we feel there's more to say - particularly as the article outlines JPMorgan's hiring plans for 2010.

1) On the bank's structure

Among other things, Dimon mentions in his letter that JPMorgan employs 19,000 programmers, 13,000 people in legal and compliance, risk, audit, HR and finance, and 80,000 people in operations functions. This is huge, given JPMorgan's investment bank as a whole employs just 25,000 people (although the organization as a whole employs 222,000).

As a tech employer, it also puts JPM on a par with Google, where headcount currently stands at 19,385.

2) On big tech spending

Those 19,000 programmers are being backed up by cash: this year, the bank plans to spend $1bn on "tech upgrades and innovations" alone.

3) On the appetite for quants

Despite quants' apparent fall from grace, JPM is still avidly hiring people with a master qualification or higher. Dimon says they recruit 1,800 people with advanced degrees every year and that, "Thousands of our people have advanced degrees in math, science and physics."

4) On strategic hiring priorities

Despite indications at JP Morgan's Investor Day that hiring isn't a priority this year, Dimon's letter suggest the bank does have some areas of hiring focus. These include:

· Prime services: the business is been grown in Europe and Asia to match the existing Bear Stearns US platform

· Investment bankers and traders: Investment banking and trading professionals are being added in China, India and Brazil

· Investment management: there are plans to add more than 200 people to global distribution to increase marketing and 'client outreach' budgets.

· Private banking - there are plans to add more than 500 private bankers globally in 2010

5) On co-heads and split responsibilities

Even though JPMorgan has its fair share of co-heads, Dimon doesn't totally agree with them. "It's also necessary to set up the right structure," he writes. "When tri-heads report to co-heads,

all decisions become political - a setup for failure, not success.

6) On pay and guarantees

· Multi-year guarantees aren't 'generally' available (from which we conclude that they are occasionally available).

· Clawbacks become more stringent the more senior you are. Anyone causing 'financial or reputational harm' to JPMorgan can have their bonus and stock clawed back, no matter how senior they are. 500 'senior individuals' can also suffer clawbacks if they don't raise/assess/identify 'material risks to the firm.' And members of the operating committee can have their unvested stock clawed back if they don't progress towards 'personal and company goals.'

· Bonuses calculations at JPM are fairly bog standard: they're based on individual performance, unit performance, and company performance. More excitingly, they include a reference to capital adjusted profitability.

7) On the makings of a great leader

Jamie also opines on what makes a great leader. This has been covered in some detail on our US site.

Suffice to say, Dimon thinks it includes discipline, fortitude, openness and humility. If you're a manager he also thinks that it helps to make lists and engage in 'detailed follow-up': "Leadership is like exercise; the effect has to be sustained for it to do any good."