Everyone now knows that Jamie Dimon is the king of Wall Street. Girls at hedge funds have crushes on him. He’s been on the cover of New York magazine, towering over the city. They’re calling him “King James.”

For the most part, the ascendency of Dimon has been due to the fact that JP Morgan successfully avoided falling into the chasm of subprime mortgages into which so many of his fellow chief executives drove their banks and brokerages. Fortune’s has a long profile that describes Dimon’s management style, and precisely how he pulled JP Morgan back from the subprime brink.

Dimon favors boisterous meetings that delve into detailed analysis of his bank’s business. Fortune’s Shawn Tully reports that people describe these variously as “Italian family dinners” and “the Roman forum.” There not a lot of kow-towing to the big man, apparently. Ideas are debated vigorously and sometimes Dimon backs down. He wanted to get JP Morgan to go “open source” with the financial products it sold, selling clients on products developed by competitors. But one of his lieutenants eventually talked him out of it, convincing Dimon that JP Morgan’s homegrown products were performing as well as anyone else’s.

The subprime call—literally, a call to the head of structured products who was on vacation—came from Dimon after a meeting discussing the performance of the retail bank. In October 2006, the mortgage servicing business was reporting that late payments on subprime mortgages were rising at an alarming rate. Dimon and his team concluded that quality control had slipped at the originator level and decided to slash its holdings of subprime debt. It was this leap from the granular details to the bigger picture that enabled JP Morgan to make the right call on subprime while so many others were still rushing headlong into what was one of the hottest businesses on Wall Street.

We can’t help but wonder if there are, in the Dimon and subprime story, the seeds of an even greater story defending the efficacy of the mega-bank. After all, it was the fact from a retail business that tipped Dimon off to a strategic change at the investment level. A smaller brokerage or investment bank would not have had access to this data. Maybe its not the model of mega-banks that’s broken, after all.

Jamie Dimon’s swat team [Fortune]

Gary Wilson, the chairman of Northwest Airlines, has penned a plea for the end of the “Imperial CEO,” the chief executive who also serves as the chairman of the board. Because of Wilson’s respected position as a board member of Yahoo and, until recently, Walt Disney, his article has the potential to be very influential.

Wilson argues that a conflict of interest arises when a chairman also serves as chief executive. Since a key role of the chairman is overseeing a board charged with hiring, overseeing and, if necessary, firing a CEO, the combining of the posts undermines a board’s independence from management, Wilson writes.

After the jump, we get all cynical about this proposal.

Last year, Merrill Lynch’s John Thain was the highest paid chief executive at a public company in the North East corridor stretching from Washington DC to Boston, according to the Associated Press.

Thain took over as CEO and chairman of Merrill in December, after record-breaking losses forced Stan O’Neal out of the corner office. According to the AP study, Thain took home $83 million in salary, bonus, benefits and perks last year. Although Thain only joined Merrill Lynch in December and was paid a base salary of $57,000, his compensation was boosted by a $15 million cash signing bonus, plus restricted stock and stock options, that Merrill paid to him when he agreed to leave the New York Stock Exchange. Much of that compensation, however, is tied up in incentive pay that Thain won’t be able to access for several years. And those options won’t do him much good if Merrill’s stock price doesn’t recover.

Lloyd Blankfein, the chief of Goldman Sachs, and Morgan Stanley’s John Mack also made the list of top earner. The rest of the list is after the jump.

Is John McCain trying to make headway with the activist investor community? Activists have been among have been among the vocal critics of lavish executive pay packages at public companies, and most of the biggest names among the activists favor Democrats in this election. (Carl Icahn, who said Barack Obama would be a terrible president, is an exception.)

Today John McCain is speaking to a small business conference on economic issues. He is expected to hit the usual Republican notes, calling for lower corporate taxes and opposing hiking capital gains taxes. But he’s also going to take a shot at “excessive” corporate pay and severance packages.

“Americans are right to be offended when the extravagant salaries and severance deals of CEOs … bear no relation to the success of the company or the wishes of shareholders,” his prepared remarks released in advance of the speech say.

It’s not just talk. He’s going so far as to endorse the hardest versions of the “say on pay” proposals that would require shareholder approval of a CEO’s pay.

“If I am elected president, I intend to see that wrongdoing of this kind is called to account by federal prosecutors. And under my reforms, all aspects of a CEO’s pay, including any severance arrangements, must be approved by shareholders,” he will say.

McCain wants low corporate taxes, regulated CEO pay [Reuters]

Nearly one-fifth of US chief executive officers in 2005 were formerly chief financial officers, a doubling of the percentage from the prior decade. The Economist explains the changing make-up of CEOS—more women, shorter tenures—but it leads with the rise of the financial professional, which seems to be caused largely by regulatory changes such as Sarbanes-Oxley and increased financial disclosure requirements.

Perhaps surprisingly, Wall Street is bucking this trend. Although CFOs such as Gary Crittenden, Zoe Cruz and Erin Callan often get talked about as successors to the top spot at their respective banks, they more often get passed over. Of Wall Street’s current chiefs, only John Thain, now the head of Merrill Lynch, served as chief financial officer (when he was at Goldman Sachs). This could be because years of Wall Street experience involve enough hands-on finance regardless of what position a senior executive takes, making the CFO experience superfluous. Or maybe Wall Street is still trapped in a pattern other US companies broke out of a year ago.

How to get to the top [The Economist]

We can’t get enough of the downfall of Ken Thompson, the as-of-this-morning former chief executive of Wachovia. Thompson hoped to preside over the growth of the bank into a universal banking powerhouse. Instead, he nearly ran it into the ground.

This morning Lanty Smith, the chairman of the company, also took over as interim CEO. One of his first duties was to send an email to Wachovia’s employees. Read the email after the jump.

This morning Wachovia shocked everyone by unceremoniously firing Ken Thompson, the ambitious corporate leader who wanted to make Wachovia into a domestic version of Citigroup. He might wonder if he succeeded too well, now that he has met the same fate of Citigroup’s one-time head, Chuck Prince.

So what will Thompson do now that he’s been tossed out for over-promising and under-delivering? We’d like to suggest that Ken take his cues from some of the other Wall Street kings who recently lost their thrones.

Wall Street’s chiefs are divided on the presidential election, according to DealScape.

The Federal Election Commission’s records show that Hillary Clinton received campaign donations from JP Morgan Chase chief Jamie Dimon, Morgan Stanley chief John Mack and Goldman Sachs chief Lloyd Blankfein. John McCain received support from Merrill Lynch’s John Thain. Dick Fuld of Lehman Brother’s is hedging his bets, supporting McCain and Clinton, as well as Barack Obama.

Citigroup’s Vikram Pandit didn’t contribute to any of the campaigns.

What does this tell us about the political acumen of Wall Street’s top men? Find out after the jump.

First off, in case any of you were unaware, our stance regarding “say on pay” is that no CEO should ever allow him or herself to be roped into such a demeaning situation. You might as well work on commission. We don’t even think anyone should entertain a discussion on the matter. The board either believes in you 100 percent or not at all. Unfortunately, sometimes the snakes known as your shareholders trick you into walking into the room under the guise of bagels and lox, and them bam! they surround you, and start demanding your compensation be tied to performance. This happened to Goldman Sachs CEO Lloyd Blankfein yesterday. He handled it all wrong.

Blankfein told shareholders pushing for a “lid on excessive pay” at GS’s annual meeting that he was very concerned about the company adopting the proposal, as it would “create a feedback loop. It would create a cloud, a constraint, a limitation on decisions that have been at the heart of what a board has done.” The whole thing was said to be very impassioned and that at several moments, one could detect a slight cracking in Blankfein’s voice. Huge mistake. Obviously Blankfein, who was paid $70 million last year would like to keep himself in the lifestyle he’s become accustomed to. But as the CEO on Wall Street who’s fucked up the least in recent memory, he should be playing it cool. He should’ve walked in there and said “I am Lloyd fucking Blankfein. There will be no say on my pay. In fact, bitches, just because you have offended me, I want my 2008 bonus package to be determined today. $100 million. That’s right, a unit, baby.” Then dropped the mic and walked off. And you know what? They would’ve said okay. You want say on pay, I have two words for you, people: Jimmy Cayne. I hear he’s looking for work, and will agree to just about anything.

Goldman Chief Says ‘Say on Pay’ Would Be Damaging [DealBook]

There’s an outrageous article in Crain’s today about executive perks. Apparently senior management at some banks get to fly on the corporate jet. Others have their country club tabs picked up by the company. A few—VERNON JORDAN, LAZARD LTD, SHAME HIM IN THE STREETS—even get their apartments paid for, at up to $24,000 a month. Crazy, isn’t it? No, it’s not crazy. What’s crazy is that everyone—author, shareholder activists, Tim Robbins and Susan Sarandon— still fails to get it. If I agree to run one of these things, I want to plied with gifts at every turn. This job is really hard and I’m very sensitive and the suggestion that I’m not worth tons of freebies plays on the deep insecurity I attempt to mask with a self-righteous attitude and shameless bravado. That makes me unhappy and you know what happens when I’m not happy—I destroy billions in shareholder capital (I might do that anyway, but without the gifts the threat is more imminent).

Plus, the notion that shouldering my basic costs of living is a “gift” is absolutely absurd. That’s a basic requirement of your job in keeping me comfortable enough to work. I never, EVER, would’ve taken this gig if I thought I would be asked to pay for wherever I happen to rest my head. It’s extremely demeaning. Know what I would consider a “gift” and something I’d even think about standing before shareholders and fighting for? Free access to the Olsen twins, which I hear Goldman has no problem subsidizing for LB, though, as this video shows, he made be getting duped.

Including $45.76 million in vested stock, Lloyd Blankfein “earned” $100 million in 2007, which the Goldman CEO tells DealBreaker he’ll be putting toward the Bowflex machine he needs in order to train for his upcoming fight with Lou Dobbs. Other senior executives at firm also got paid a decent amount. Meanwhile, fellow 941 Park Avenue resident, Stan O’Neal, is still, hideously, being asked to explain to Congress why he should get to keep his $163 million paycheck. Thank god Blankfein is moving out of that dump ASAP, otherwise, those elevator rides could get awkward again, and I don’t think anyone wants to relive the uncomfortableness that ensued after 2005’s non-denominational Key Party, except for Mark Haines, who used his press pass to gain entry, and made out like a bandit.

Goldman Sachs CEO gets $100 mln in pay, stock [Reuters]
Goldman Sachs Proxy Statement [SEC]

Unsurprisingly, only one of these little elves is smiling.

Starting January 1, the U.S. Golf Association’s Golf Handicap Information Network will stop displaying complete scoring records, course locations and dates of rounds played for public consumption and ridicule. Unfortunately, they didn’t take into account the HUGE following Dealbreaker has among caddies, who’ve already promised to take and pass on copious notes regarding who routinely breaks triple digits (on his best days: Blankfein) and who calls the black cads “boy” (surprisingly: O’Neal)*. Nice try, USGA.

Members Only [Breaking Views]

*I’m supposed to inform that these examples of espionage, as far as we know, are made up. Why, what have you heard?

The Wall Street Journal’s Carol Hymowitz reports this morning that today’s CEOs are devoting far too much time to actually failing at their jobs and not enough to determining who will get to be CEO next when those failures are made public, and they get canned. According to Hymowitz, “Chief execs are too busy focussing on the shit of the present so that when new shit comes to light, their companies are shit out of luck.” I think— I think but I’m not sure— she might be referring to Chuck Prince/Citigroup and Stan O’Neal/Merrill Lynch. She’s obviously not talking about Jimmy Cayne/Bear Stearns, because Big C spent at least an hour last Tuesday afternoon coming up with a few options for what BSC should do in case of an emergency. Unfortunately, Cayne couldn’t choose one (“I can’t decide, I love them all. It would be like asking me to choose between White Widow and Northern Lights— impossible.”) and in a voicemail he probably regrets leaving, asked us to “put it to the DealBreaker audience.” So:

And we’re back to Thain already.

Not that there was any doubt but it’s now official. Here’s the Merrill Lynch press release announcing that Thain takes the helm on December 1st.

“Merrill Lynch & Co., Inc. (NYSE: MER) today announced that John A. Thain, chief executive officer, director and member of Management Committee of NYSE Euronext, Inc. and former president and chief operating officer of Goldman Sachs Group, has been appointed chairman and chief executive officer of Merrill Lynch, effective December 1,” Merrill said in a statement.

Full Press Release after the jump.

Let’s take a bit of a breather from the news about John Thain and Merrill Lynch. (We’ll come back to that momentarily, no doubt.) In all the excitement, we almost overlooked an important column by the Wall Street Journal’s Holman Jenkins. In today’s Journal, Jenkins urges some sobriety in the face of losses at Wall Street firms, something that’s been sorely absent in recent weeks.

Indeed, at some point—after the executions of Stan O’Neal and Chuck Prince and while the mobs were turning their attention to Bear Stearns’ Jimmy Cayne—the urge to overthrow the heads of so many Wall Street firms began to take on tones that almost recalled the French Revolution. After losses at Bear Stearns were less than expected, Cayne now looks safe but it’s worth taking a step back and wondering if anger at chief executives over losses might have gone too far.

Certainly calls for jailing O’Neal or Prince—as we heard from Bill Lerach, a plaintiff’s laywer who is himself on the way to prison—went too far. Losing money is not a crime, at least not yet. But the more broadly felt outrage at the size of severance packages for O’Neal and Prince were only slightly more measured. As Holman points out,
“Misplaced moralizing over business losses also infects the discussion of exit packages. Notice how these discussions substitute the language of reward and punishment for what are really matters of contractual relations and strategic, before-the-fact incentives.”

To wit, Merrill Lynch CEO Stan O’Neal’s severance is not a bonbon from a loving board, but what the board feels legally obligated to pay him, based on commitments made before the results of his tenure were known. Nor was he without proper incentives, then or now. His chief performance pay was Merrill stock, and his holdings are worth millions less than they were before the subprime losses emerged.

That won’t satisfy Mr. Lerach, who thinks Mr. O’Neal should be imprisoned. But nobody in his right mind would take the job on such terms given the risks entailed in running a modern business, including the risk of civil or criminal litigation if things go sour. Indeed, what towering pay in the risk-taking professions really may be telling us is how utterly averse to risk-taking ordinary human nature is.

One fact that will surely drive the Lerach’s of the world up the wall is that the recent ousters on Wall Street are likely to result in even higher pay for management. The risks of running a bank or a brokerage are greater now than they have been at any time in the past—risks of prosecution, lawsuits, and ouster—and the top managers will demand to be compensated for those risks. Already the wires are carrying stories telling us that one of the surviving CEOs—Lloyd Blankfein of the House of Goldman—may receive as much at $75 million this year.

Losing Money Is a Crime [Wall Street Journal]

Whoever said sexism isn’t alive and well in America has been asleep behind the wheel or living under a rock for, well, forever. Now, before you get all PC on us, save your breath. The glass ceiling here at Dealbreaker is not only buttressed by myself and Bess Levin – but John Carney smiles down on us and his other female minions from time to time sitting on his glass thrown in his ivory tower.

In addition to Dealbreaker, Neiman Marcus management has an interesting division of how they divvy up “allowances” to their CEO’s. Karen Katz, President and CEO gets an annual $25k allowance for clothing while CEO Burton Tansky doesn’t get jack. He does however, get a $12k car allowance (will that even get you a Ford Festiva?). James J. Gold, president of Bergdorf Goodman received a $167k “cost of living” adjustment for relocating from Texas to New York and an additional $296k for NY state taxes. Footnoted.org poses the question – are women simply more focused on clothing while men are more focused on cars and taxes?

Dealbreaker.com gets to the heart of the matter – men get more tail when they drive a hot car. Women can only get men to listen to them if they dress slutty.

On how men and women differ… [footnoted.org]

We first heard about the alleged hookers and drugs adventures of former Broadcom chief executive Henry Nicholas while we were live on Squawk Box.

“Have you heard about the Broadcom story,” Becky Quick asked as we sat down and got mic’d in. “You’re going to like this.”

The story was so incredible—allegations of forced drug use, doping clients, ecstasy, heroin, cocaine, sex with prostitutes—that we hardly, well, credited it. Mostly, it seemed like a great lead in to a joke rather than anything more serious.

There were also serious problems with the story. The allegations were coming from a former employee who had used legal maneuvering to make sure the story became public. It was clearly aimed at publicly embarrassing Nicholas, whose attorney characterized the accusations as blackmail.

But the allegations took on a bit more credibility today when the Associated Press revealed that similar charges have been leveled against Nichols in the past. According to court documents the AP has uncovered, Nicholas had an illegal network of tunnels and rooms built underneath his estate. The network allegedly included a secret lair where Nicolas could “indulge his appetite for illegal drugs and sex with prostitutes,” according to the work crew that built it. Apparently, the lair was hidden from both his wife and city officials.

But let’s not jump to conclusions. We’re sure it’s totally possible that the illegal, secret, underground lair is really just a workshop where Nicholas built birdhouses or something. And maybe these construction workers are blackmailing Nicholas too. Yeah. That sounds pretty plausible.

Or, you know, maybe the title of this 2004 Orange County weekly profile wasn’t quite as much of a stretch as we though. It’s called: Henry Nicholas, Superhero.

Former Broadcom CEO Accused of Building Secret Lair Under Estate for Sex and Drugs [Associated Press via Fox News]

Carl Icahn, Hank Greenberg and the New York Times all took shots at Wall Street’s love of golf this summer, but as Lloyd Blankfein’s drives will always gravitate toward the water hazard, so too will CEOs always land at the tee, a new book asserts. In “Deal on the Green,” David Rynecki defends the links as a second board room, “where up-and-comers can impress the boss and where CEOs can seal multibillion-dollar deals. Its no coincidence that many of the most admired people in business—Jack Welch, Bill Gates, Warren Buffett, Sandy Weill—always carved out time in their busy schedules for golf.”

In fact, a good putt in a Connecticut country club combined with some around-the-office golf witticisms (we suggest Mark Twain’s “Golf is good walk spoiled”) may be just what the caddy ordered if you want to make eight figures. According to Rynecki, Stan O’Neal rose at Merrill Lynch because, “some of the more influential Merrill people got to spend time with [him] on the course and saw a different side of him.”

O’Neal is tied for 77th in this month’s Golf Digest ranking of the top 200 CEO golfers. Some other notables include: Bear Stearn’s James Cayne (tied at 124), Lehman Brothers’ Richard Fuld (Tied at 154) and Morgan Stanley’s John Mack (200).

Of course, our totally non-scientific study of last quarter’s share price movements compared to golf scores indicates that while golfing might be good for the executive it might not be so good for the performance of his company’s stock.

CEO List 2006 (note the misspelling of “Executive” in the sub-headline) [Golf Digest]
A Tiger in the boardroom [The Economist]