Former JP Morgan executive, Mike Cavanagh, who was slated to take over for Jamie Dimon as CEO in the coming years, has left to take over the private equity firm, Carlyle. This makes him the third leader of JP Morgan to head toward the lesser regulated area of the business, and, according to those who were close to the situation, the move was related to – in part – to the differences in regulation between the two sub-sectors. Interestingly enough, these moves are happening in many banks, and could result in larger, more regulated, banks being less able to retain the top talent.
To give an idea of one difference: Mr. Cavanagh earned $17,000,000 last year. His new colleagues split $750,000,000 for the top three executives! Jamie Dimon referred to the move as a “loss” for his company, and with those that came before, it will be curious to see the ones that follow. The three executives who left prior to this did so following the financial crisis in 2008 and the “London whale” scandal, which involved a rogue trader making non-sensical moves in the market, which JP Morgan traders latched on to thinking someone had an inside move. Interestingly enough, none were moved to leave following the illegal foreclosure of more than 3,000 deployed servicemen and women who were current on their mortgages.At 48-years-old, Cavanagh will be sharing the role of President with another Carlyle executive of 19 years, Glenn Youngkin. Together, their talents and personalities should complement each other well, and add to the firm’s growing profitability given Cavanagh’s 6 years as the bank’s CFO. While there are other people in line to take over for Mr. Dimon, the CEO noted that he and Cavanagh had a lot of history, working together since the early ’90’s before the big merger with Chase.As a result, Cavanagh noted in a memo to his former employer that is was “hard to leave,” but he must believe that he’s making the best decision to do so. Cavanagh’s has some history with Carlyle, too, though. In 2012, he helped bring the company public,so his intimate knowledge with the firm, its processes, and leadership will make him a great asset there, or not. Future will tell us.