UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrantx                            Filed by a Party other than the Registrant¨

Check the appropriate box:

JPMORGAN CHASE & CO.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

JPMorgan Chase & Co. currently has a no-action letter pending before the Securities and Exchange Commission (“SEC”) seeking to exclude the following stockholder proposal submitted under Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): Item 6: Stockholder Proposal regarding Collateral in over the counter derivatives trading. If the SEC concurs with JPMorgan Chase that this proposal may be properly excluded from JPMorgan Chase’s proxy statement under Rule 14a-8 of the Exchange Act, JPMorgan Chase will exclude such proposal from its definitive proxy statement.

JPMorgan Chase & Co.

270 Park Avenue

New York, New York 10017-2070

March [    ], 20092010

Dear fellow shareholder:shareholders:

We are pleased to invite you to the annual meeting of shareholders to be held on May 19, 2009,18, 2010, at our offices at One Chase Manhattan Plaza in New York City. As we have done in the past, in addition to considering the matters described in the proxy statement, we will review major developments since our last shareholders’ meeting.

We hope that you will attend the meeting in person, but even if you are planning to come, we strongly encourage you to designate the proxies named on the proxy card to vote your shares. This will ensure that your common stock is represented at the meeting. The proxy statement explains more about proxy voting. Please read it carefully. We look forward to your participation.

Sincerely,

James Dimon

Chairman and Chief Executive Officer

Notice of 20092010 Annual Meeting

of Shareholders and Proxy Statement

Matters to be voted on:

By order of the Board of Directors

Anthony J. Horan

Secretary

March [    ], 20092010

Please vote promptly.

If you attend the meeting in person, you will be asked to present photo identification, such as a driver’s license. See “Attending the annual meeting” onat page 40.43.

Please note, ifIf you hold your common stockshares in street name and if you do not provide voting instructions, your shares will not be votedon any proposal on which your broker does not have discretionary authority to vote. Brokers do not have discretionary authority to vote on the election of directors and on the shareholder proposals.

We are pleased to be using the Securities and Exchange Commission rule that allows companies to furnish proxy materials to their shareholders over the Internet. In accordance with this rule, we sent shareholders of record at the close of business on March 20, 2009,19, 2010, a Notice of Internet Availability of Proxy Materials on or about March [    ], 2009.2010. The notice contains instructions on how to access our Proxy Statement and Annual Report for the year ended December 31, 2008,2009, via the Internet and how to vote online. Instructions on how to receive a printed copy of our proxy materials is included in the notice, as well as in the attached Proxy Statement.

Important Notice Regarding the Availability of Proxy Materials for the 20092010 Annual Meeting of Shareholders to be held on May 19, 2009.18, 2010. Our 20092010 Proxy Statement and Annual Report for the year ended December 31, 2008,2009, are available free of charge on our Web site at http://investor.shareholder.com/jpmorganchase/annual.cfm.

Contents

Proxy statement

Your vote is very important. For this reason, the Board of Directors of JPMorgan Chase & Co. (JPMorgan Chase or the Firm) is requesting that you allow your common stock to be represented at the annual meeting by the proxies named on the proxy card. This proxy statement is being sent or made available to you in connection with this request and has been prepared for the Board by our management. The proxy statement is being sent and made available to our shareholders on or about March [    ], 2009.31, 2010.

Proposal 1 – Election of directors

Our Board of Directors has nominated 11 directors for election at this annual meeting to hold office until the next annual meeting and the election of their successors. All of the nominees are currently directors. Each has agreed to be named in this proxy statement and to serve if elected. All of the nominees are expected to attend the 20092010 annual meeting. All of the nominees for election at the 2008 annual meeting attended the meeting on May 20, 2008.

Robert I. Lipp, who served as a director of the Firm or a predecessor institution since 2003, retired from the Board and as Senior Advisor of the Firm in September 2008.

Although we know of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxies intend to vote your common stock for any substitute nominee proposed by the Board of Directors. The Board may also choose to reduce the number of directors to be elected, as permitted by our By-laws.

The Board’s Corporate Governance and Nominating Committee (Governance Committee) is responsible for evaluating and recommending to the Board proposed nominees for election to the Board of Directors. The Governance Committee, in consultation with the Chief Executive Officer, periodically reviews the criteria for composition of the Board and evaluates potential new candidates for Board membership. The Governance Committee then makes recommendations to the Board. The Governance Committee also takes into account criteria applicable to Board committees.

As stated in the Corporate Governance Principles of the Board (Corporate Governance Principles), in determining Board nominees, the Board wishes to balance the needs for professional knowledge, business expertise, varied industry knowledge, financial expertise, and CEO-level management experience. Following these principles, the Board seeks to select nominees who combine leadership and business management experience, experience in disciplines relevant to the Firm and its businesses, and personal qualities reflecting integrity, judgment, achievement, effectiveness, and willingness to appropriately challenge management.

The Board strives to ensure diversity of representation among its members. Of the 11 director nominees, two are women and one is African-American. Increasing diversity is a priority, and when considering prospects for possible recommendation to the Board, the Governance Committee reviews available information about the prospects, including gender, race and ethnicity, as well as experience, qualifications, attributes and skills.

The Governance Committee will consider director candidates recommended for consideration by members of the Board, by management and by shareholders. Shareholders wishing to recommend to the Governance Committee a candidate for director should write to the Secretary at: JPMorgan Chase & Co., Office of the Secretary, 270 Park Avenue, New York, New York 10017.

It is the policy of the Governance Committee that candidates recommended by shareholders will be considered in the same manner as other candidates and there are no additional procedures a shareholder must undertake in order for the Governance Committee to consider such shareholder recommendations.

The Governance Committee annually leads the Board in its review and self-evaluation of the performance of the Board as a whole with a view to increasing the effectiveness of the Board.

Information about the nominees

Together the members of the Board provide the Firm with a breadth of demonstrated senior leadership and management experience in large complex organizations, global marketing, services and operations, regulated industries, wholesale and retail businesses, financial controls and reporting, compensation, governance, management succession, strategic planning and risk management. The directors bring broad and varied skills and knowledge from positions in global businesses, not-for-profit organizations and government, and diverse perspectives from a broad spectrum of industries, community activities and other factors. Each possesses the personal characteristics needed for the responsibilities of a director: each has demonstrated significant achievement in his or her endeavors, can work cooperatively and productively in the interest of all shareholders, possesses high character and integrity, devotes the necessary time to discharge his or her duties, and, for non-management directors, is independent.

The following provides biographical information regarding each of the nominees, including their specific business experience, qualifications, attributes and skills that the Board considered, in addition to their prior service on the Board, when it determined to nominate them.

Unless stated otherwise, all of the nominees have been continuously employed by their present employers for more than five years. The age indicated in each nominee’s biography is as of May 19, 2009,18, 2010, and all other biographical information is as of the date of this proxy statement. Our directors are involved in various charitable and community activities and we have listed a number of these below.

Predecessor institutions of JPMorgan Chase include Bank One Corporation and its predecessors, J.P. Morgan & Co. Incorporated and The Chase Manhattan Corporation.

Crandall C. Bowles, 61,62, Chairman of Springs Industries, Inc., home furnishings. Director since 2006.

Mrs.Ms. Bowles has been Chairman of Springs Industries, Inc., a manufacturer of window products for the home, since 1998 and a member of its board since 1978. From 1998 until 2006, she was also Chief Executive Officer of Springs Industries, Inc. Subsequent to a spinoff and merger in 2006, she was Co-Chairman and Co-CEO of Springs Global Participacoes S.A., a textile home furnishings company based in Brazil, until July 2007. SheMs. Bowles is also a member of the board of directorsdirector of Deere & Company (since 1999 and previously from 1990 to 1994) and of Sara Lee Corporation. Mrs.Corporation (since 2008). She previously served as a director of Wachovia Corporation (1991-1996).

Ms. Bowles is a graduate ofgraduated from Wellesley College in 1969 and earned an MBA from Columbia University.University in 1973. She serves on the boards of the Carolina Thread Trail, The Robert Packard Center for ALS Research at Johns Hopkins and the Maya Angelou Research Center on Minority Health. SheThe University of North Carolina Press and is a member of The Business Council and the Committee of 200,200.

Ms. Bowles has extensive experience managing large complex business organizations at Springs Industries, Inc. and Springs Global Participacoes S.A. In that capacity, and through her current and prior service on other public company boards, she has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation, international business, and sales and marketing of consumer products and services. Her philanthropic activities give her valuable perspective on important societal and economic issues relevant to the South Carolina Climate, Energy and Commerce Advisory Committee.Firm’s business.

Stephen B. Burke, 50,51, Chief Operating Officer of Comcast Corporation, cable television. Director since 2004 and Director of Bank One Corporation from 2003 to 2004.

Mr. Burke has been Chief Operating Officer of Comcast Corporation, one of the nation’s leading providers of entertainment, information and communication product and services, since 2004, and was President of Comcast Cable Communications, Inc., from 1998 until January 2010. Comcast is the largest cable television. Director since 2003.

Mr. Burke joinedcompany, largest residential internet service provider and third largest phone company in America. Before joining Comcast, Cable as President in 1998. Prior to 1998, he wasserved with The Walt Disney Company from 1986.as President of ABC Broadcasting. Mr. Burke joined The Walt Disney Company in January 1986, where he helped to develop and found The Disney Store and helped to lead a comprehensive restructuring effort of Euro Disney S.A. Mr. Burke is a graduatedirector of Berkshire Hathaway Inc. (since 2009).

Mr. Burke graduated from Colgate University in 1980 and received an MBA from Harvard Business School. He had been a director of Bank One Corporation from 2003 until 2004.School in 1982. He is Chairman of The Children’s Hospital of Philadelphia.

Mr. Burke has extensive experience managing large complex business organizations at Comcast, ABC Broadcasting, and Euro Disney, and in that capacity he has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation, sales and marketing and technology and operations. Comcast and ABC Broadcasting have provided him with experience working in regulated industries and Euro Disney has given him international business experience. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

David M. Cote, 56,57, Chairman and Chief Executive Officer of Honeywell International Inc., diversified technology and manufacturing. Director since 2007.

Mr. Cote has beenis Chairman and Chief Executive Officer of Honeywell International Inc. since July 2002., a diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; turbochargers; and specialty materials. He joined Honeywell aswas elected President and Chief Executive Officer in February 2002, and was named Chairman of the Board in July 2002. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., which he joined in 1999.1999 after a 25 year career with General Electric. Mr. Cote is a graduatedirector of Honeywell International Inc. (since 2002) and was a director of TRW Inc. (1999-2001).

Mr. Cote graduated from the University of New Hampshire wherein 1976. In 2010, he earnedwas named by President Obama to serve on the bipartisan National Commission on Fiscal Responsibility and Reform. Mr. Cote was named co-chair of the U.S.-India CEO Forum by President Obama in 2009, and has served on the Forum since July 2005. Mr. Cote serves on an advisory panel to Kohlberg Kravis Roberts & Co.

Mr. Cote has had extensive experience managing large complex business organizations at Honeywell and TRW, and in that capacity he has dealt with a bachelor’s degreewide range of issues including audit and financial reporting, risk management, executive compensation, sales and marketing of industrial and consumer goods and services, and technology matters. He has extensive experience in international business administration. He received an honorary Juris Doctor degree from Pepperdine University in 2001.

1issues and public policy matters.

James S. Crown, 55,56, President of Henry Crown and Company, diversified investments. Director since 1991.2004 and Director of Bank One Corporation from 1991 to 2004.

Mr. Crown joined Henry Crown and Company, a privately owned investment company which invests in public and private securities, real estate and operating companies, in 1985 as Vice President and became President in 2003. He earned a B.A. in 1976 from Hampshire College and received his law degree in 1980 from Stanford University Law School. He had been a director of Bank One Corporation from 1991 until 2004. Mr. Crown is also a director of General Dynamics Corporation (since 1987) and of Sara Lee Corporation.Corporation (since 1998).

Mr. Crown graduated from Hampshire College in 1976 and received his law degree from Stanford University Law School in 1980. Following law school, Mr. Crown joined Salomon Brothers Inc. and became a vice president of the Capital Markets Service Group in 1983. In 1985 he joined his family’s investment firm. He is Chairman of the Board of Trustees for the University of Chicago Medical Center and a trusteeTrustee of the Museum of Science and Industry, The Aspen Institute, the University of Chicago and of the Orchestral Association.Chicago Symphony Orchestra. He is a member of the American Academy of Arts and Sciences.

Mr. Crown has experience managing a large complex business organization at Henry Crown and Company. In that capacity, and through his service on other public company boards, he has dealt with a wide range of issues including audit and financial reporting, investment management, risk management, and executive compensation. His legal training gives him enhanced perspective on legal and regulatory issues. He is experienced in investment banking and capital markets matters through his prior work experience and subsequent responsibilities. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

James Dimon, 53,54, Chairman and Chief Executive Officer of JPMorgan Chase. Director since 2000.2004 and Chairman of the Board of Bank One Corporation from 2000 to 2004.

Mr. Dimon became Chairman of the Board on December 31, 2006, and has been Chief Executive Officer and President since December 31, 2005. He had been President and Chief Operating Officer since JPMorgan Chase’s merger with Bank One Corporation in July 2004. At Bank One he had been Chairman and Chief Executive Officer since March 2000. Prior to joining Bank One, Mr. Dimon is a graduate ofhad extensive experience at Citigroup Inc., the Travelers Group, Commercial Credit Company and American Express Company.

Mr. Dimon graduated from Tufts University in 1978 and received an MBA from Harvard Business School.School in 1982. He is a director of The College Fund/UNCF and serves on the Board of Directors of The Federal Reserve Bank of New York, The National Center on Addiction and Substance Abuse, Harvard Business School and Catalyst. He is also on the Board of Trustees of New York University School of Medicine.

Mr. Dimon has many years of experience in the financial services business, both wholesale and retail, as well as international and domestic experience. As CEO, he is intimately familiar with all aspects of the Firm’s business activities. In addition to the JPMorgan Chase merger with Bank One, he led the Firm’s successful acquisition and integration of The Bear Stearns Companies Inc. and the banking operations of Washington Mutual Bank. His business experience and his service on the board of the Federal Reserve Bank of New York have given him experience dealing with government officials and agencies and insight into the regulatory process. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

Ellen V. Futter, 59,60, President and Trustee of the American Museum of Natural History. Director since 1997.2001 and Director of J.P. Morgan & Co. Incorporated from 1997 to 2000.

Ms. Futter became President of the American Museum of Natural History in November 1993, prior to which she had been President of Barnard College since 1981. SheThe Museum is one of the world���s preeminent scientific and cultural institutions. Her career began at Milbank, Tweed, Hadley & McCloy where she practiced corporate law. Ms. Futter is a director of Consolidated Edison, Inc. (since 1997) and was previously a director of American International Group Inc. (1999-2008), Bristol-Myers Squibb Company (1999-2005), and Viacom (2006-2007).

Ms. Futter graduated from Barnard College in 1971 and earned a J.D.law degree from Columbia Law School in 1974. She had been a director of J.P. Morgan & Co. Incorporated from 1997 until 2000. Ms. Futter is also a director of Consolidated Edison, Inc. She is a member of the Board of Overseers and Managers of Memorial Sloan-Kettering Cancer Center, a Fellow of the American Academy of Arts and Sciences and a member of the Council on Foreign Relations. Ms. Futter is also a director of The American Ditchley Foundation and NYC & Company. She was a director of the Federal Reserve Bank of New York (1988-1993) and served as its Chairman (1992-1993).

Ms. Futter has managed large education and not-for-profit organizations, Barnard College and the American Museum of Natural History, and in that capacity, she has dealt with a wide range of complex organizational issues. Such work and her service on public company boards and the board of the Federal Reserve Bank of New York have given her experience with issues including regulated industries, dealing with government officials and agencies, the financial services industry, risk management, executive compensation, and audit and financial reporting. Her years of practicing corporate law give her enhanced perspective on legal and regulatory issues. Her philanthropic activities give her valuable perspective on important societal and economic issues relevant to the Firm’s business.

William H. Gray, III, 67, Chairman68, Co-Chairman of the Amani Group,GrayLoeffler, LLC, consulting and advisory. Director since 1992.2001 and Director of The Chase Manhattan Corporation from 1992 to 2000.

Mr. Gray has been Co-Chairman of GrayLoeffler, LLC (formerly Amani Group) since September 2009, having previously served as Chairman of the Amani Group since August 2004. GrayLoeffler, LLC is a consulting and advisory firm. Mr. Gray was President and Chief Executive Officer of The College Fund/UNCF (educational assistance) from 1991 until he retired in 2004. He was a member of the United States House of Representatives from 1979 to 1991. Mr. Gray earnedis a B.A. degreedirector of Dell Computer Corporation (since 2000), Pfizer Inc. (since 2000) and Prudential Financial, Inc. (since 2001). He was a director of Visteon Corporation (2000-2009).

Mr. Gray graduated from Franklin & Marshall College in 1963, where he is currently a Trustee, and received a master’s degree in divinity from Drew Theological Seminary in 1966 and a master’s degree in church history from Princeton Theological Seminary.Seminary in 1970. He had beenhas served as a directorfaculty member and professor of The Chase Manhattan Corporation from 1992 until 2000.history and religion at five universities and colleges. Mr. Gray was elected as Chair of the Budget Committee of the House of Representatives in 1985, and in 1988 he was elected as the Chairman of the Democratic Caucus. He was elected as the Majority Whip of the House of Representatives in June 1988. President Bill Clinton appointed him as the Special Advisor on Haiti in 1995. He is alsoan Advisory Council Member of the Business Roundtable Institute for Corporate Ethics.

Mr. Gray has managed a directorlarge not-for-profit organization, The College Fund/UNCF. In that capacity, and through his current and prior service on other public company boards, he has dealt with a wide range of Dell Computer Corporation, Pfizer Inc., Prudential Financial, Inc.issues including audit and Visteon Corporation.financial reporting, risk management, and executive compensation. He has served on the boards of other public companies in regulated industries. His years as an elected official give him experience with the legislative and regulatory process, and he has extensive experience dealing with government officials and agencies. His service on the House Budget Committee gives him broad experience in finance-related matters; his service as Special Advisor on Haiti is an example of his international experience; and his philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

Laban P. Jackson, Jr., 66,67, Chairman and Chief Executive Officer of Clear Creek Properties, Inc., real estate development. Director since 1993.2004 and Director of Bank One Corporation from 1993 to 2004.

Mr. Jackson has been Chairman of Clear Creek Properties, Inc., a real estate development company, since 1989. Mr. Jackson was a director of The Home Depot (2004-2008), SIRVA (2006-2007) and IPIX Corporation (1999-2006). He is also a graduatedirector of J.P. Morgan Securities Ltd., a wholly owned subsidiary of the Firm, since 2010.

Mr. Jackson graduated from the United States Military Academy.Academy in 1965. He had beenwas a director of the Federal Reserve Bank One Corporation from 1993 until 2004.of Cleveland (1987-1992). Mr. Jackson is also a director of Markey Cancer Foundation.Foundation and Transylvania University.

Mr. Jackson has founded and managed businesses and is an experienced entrepreneur and manager. In that capacity, and through his current and prior service on other public company boards, he has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation, marketing and product development. His service on the board of the Federal Reserve Bank of Cleveland has given him experience dealing with government officials and agencies and further experience in financial services.

Mr. Jackson is member of the Audit Committee Leadership Network (ACLN), a group of audit committee chairs from some of North America’s leading companies, committed to improving the performance of audit committees and helping to enhance trust in the financial markets. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

David C. Novak, 56,57, Chairman and Chief Executive Officer of Yum! Brands, Inc., franchised restaurants. Director since 2001.2004 and Director of Bank One Corporation from 2001 to 2004.

Prior to becomingMr. Novak has been Chairman in Januaryof Yum! Brands, Inc. since 2001 and Chief Executive Officer in Januarysince 2000 Mr. Novakand was Vice Chairman and President of Tricon Global Restaurants, Inc. (now known as(as Yum! Brands Inc.)was formerly named) from June 1997 until January 2000;2000. Yum! Brands is the world’s largest restaurant company in terms of system restaurants with more than 36,000 restaurants in more than 110 countries and territories, and more than 1.4 million company employees and franchise associates. Previously he had been Group President and Chief Executive Officer of KFC and Pizza Hut, North America, subsidiaries of PepsiCo, from August 1996 until June 1997; and President of KFC North America, a subsidiary of PepsiCo, from 1994 until 1996. He receivedMr. Novak is a B.A. degreedirector of Yum! Brands, Inc. (since 1997).

Mr. Novak graduated from the University of Missouri.Missouri in 1974. He had been a director of Bank One Corporation from 2001 until 2004. Mr. Novak is also a director of Yum! Brands Foundation and a director of the Friends of the United Nations World Food Program.Program and The Business Council.

2Mr. Novak has experience managing large complex businesses at Yum! Brands and its predecessors and in that capacity he has dealt with a wide range of issues including audit and financial reporting, risk management, and executive compensation. Through his various positions at Yum! Brands and its predecessors companies, he has gained extensive experience in selling and marketing products to consumers, in strategic planning, and in international business. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

Lee R. Raymond, 70,71, Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation, oil and gas. Director since 1987.2001 and Director of J.P. Morgan & Co. Incorporated from 1987 to 2000.

Mr. Raymond was Chairman of the Board and Chief Executive Officer of Exxon MobilExxonMobil from 1999 until he retired in December 2005. ExxonMobil’s principal business is energy, involving exploration for and production of crude oil and natural gas, manufacture of petroleum and petrochemical products, and transportation and sale of crude oil, natural gas, petroleum and petrochemical products. He had been Chairman of the Board and Chief Executive Officer of Exxon Corporation from 1993 until its merger with Mobil Oil Corporation in 1999, having begun his career in 1963 with Exxon. He was a director of Exxon Mobil Corporation (1993-2005).

Mr. Raymond graduated from the University of Wisconsin with a bachelor degree in chemical engineering in 1960 and received a Ph.D. in the same discipline from the University of Minnesota in 1963. He wasis a director of J.P. Morgan & Co. Incorporated from 1987 until 2000. He is a member of the National PetroleumBusiness Council for International Understanding, a member of the Board of Trustees of the American Enterprise Institute, a trusteeTrustee of the Wisconsin Alumni Research Foundation, a member of the President’s Export Council, a Trustee of the Mayo Clinic, and a member of the Innovations in Medicine Leadership Council of UT Southwestern Medical Center.Center, a member of the National Academy of Engineering and a member and past Chairman of the National Petroleum Council. Mr. Raymond serves on an advisory panel to Kohlberg Kravis Roberts & Co.

Mr. Raymond has extensive experience managing a large complex business at ExxonMobil and its predecessors, and in that capacity he has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation, marketing, and operating in a regulated industry. He has extensive international business experience. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

William C. Weldon, 60,61, Chairman and Chief Executive Officer of Johnson & Johnson, health care products. Director since 2005.

Prior to becomingMr. Weldon has been Chairman and Chief Executive Officer of Johnson & Johnson insince 2002, Mr. Weldonprior to which he served as Vice Chairman from 2001 and Worldwide Chairman, Pharmaceuticals Group from 1998 until 2001. Johnson & Johnson is engaged worldwide in the research and development, manufacture and sale of a broad range of products in the health care field. The company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being.

Mr. Weldon served in a number of other senior executive positions since joining Johnson & Johnson in 1971. HeIn 1982 he was named manager, ICOM Regional Development Center in Southeast Asia. Mr. Weldon was appointed executive vice president and managing director of Korea McNeil, Ltd., in 1984 and managing director of Ortho-Cilag Pharmaceutical, Ltd., in the U.K. in 1986. In 1989, he was named vice president of sales and marketing at Janssen Pharmaceutica in the U.S., and in 1992 he was appointed president of Ethicon Endo-Surgery. Mr. Weldon is a graduatedirector of Johnson & Johnson (since 2002).

Mr. Weldon graduated from Quinnipiac University.University in 1971. Mr. Weldon is Chairman of the CEO Roundtable on Cancer, a director of the US-China Business Council, a member of The Business Council, a member of the Healthcare Leadership Council and a member of the Business Roundtable, and a member of the Sullivan Commission on Diversity in the Health Professions Workforce. Mr. Weldon also serves on the Liberty Science Center Chairman’s Advisory Council and as a member of the Board of Trustees for Quinnipiac University. He previously served as Chairman of the Pharmaceutical Research and Manufacturers of America (PhRMA).America.

Mr. Weldon has experience managing a large complex organization at Johnson & Johnson and in that capacity has dealt with a wide range of issues including audit and financial reporting, risk management, and executive compensation. Through his role at various Johnson & Johnson entities, he has had extensive experience with international business, with operating in a regulated industry, and with sales and marketing to consumers. His philanthropic activities give him valuable perspective on important societal and economic issues relevant to the Firm’s business.

Corporate governance

General

JPMorgan Chase is governed by a Board of Directors and various committees of the Board that meet throughout the year. Directors discharge their responsibilities at Board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer (CEO), management and others regarding matters of concern and interest to the Firm.

Governance is a continuing focus at JPMorgan Chase, starting with the Board of Directors and extending throughout the Firm. In this section we describe some of our key governance practices.

Majority voting for directors –In 2007,addition to the Board amended the Firm’s By-laws to provide a majority voting standard for election of directorspractices discussed below, we solicit periodic feedback from our shareholders on governance matters and on shareholder proposals, and engage in uncontested elections (resignation by any incumbent director who is not re-elected) and plurality voting in any election that is contested.

Presiding Director –In December 2006, the Board established the position of Presiding Director. The Presiding Director presides at executive sessions of non-management directors and at Board meetings at which the Chairman is not present, and has the authority to call meetings of non-management directors. The Presiding Director facilitates communication between the Chairman and CEO and the non-management directors, as appropriate, and performs such other functions as the Board directs. The Presiding Director position rotates semi-annually,discussion with the chairmany of the Compensation & Management Development Committee (Compensation Committee) serving from January through June, and the chairproponents of the Corporate Governance & Nominating Committee (Governance Committee) serving from July through December.

Non-management director meetings –Non-management directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.shareholder proposals.

Corporate Governance Principles of the Board –The Board of Directors first adopted Corporate Governance Principles in 1997, and has revised them periodically since then to reflect evolving best practices and regulatory requirements, including the New York Stock Exchange (NYSE) corporate governance listing standards. The Corporate Governance Principles of the Board (Corporate Governance Principles) establish a framework for the governance of the Firm.

Documents available –The Corporate Governance Principles, Code of Conduct, Code of Ethics for Finance Professionals, and the JPMorgan Chase & Co. Political Contributions Statement, as well as the Firm’s By-laws and charters of our principal Board committees, can be found on our Web site at www.jpmorganchase.com under Governance.Governance under the About Us tab. These documents will also be made available to any shareholder who requests them by writing to the Secretary at: JPMorgan Chase & Co., Office of the Secretary, 270 Park Avenue, New York, New York 10017.

2009 and 2010 Initiatives –Actions taken during 2009 and 2010 include:

Special shareholder meetings –The Board amended the By-laws in January 2010 to permit shareholders holding at least 20% of the outstanding common shares (net of hedges) to call special meetings. This action reduced the ownership threshold required to call special meetings from 33 1/3% of outstanding common shares, and was taken in response to a shareholder proposal presented at our 2009 annual meeting calling for a 10% threshold. That proposal did not pass but received a substantial favorable vote.

Say on Pay –The Firm’s proxy statement for 2009 contained an advisory vote on executive compensation as required for participants in the U.S. Department of the Treasury’s Capital Purchase Program under the Troubled Asset Relief Program, or TARP. Shareholders approved the compensation of executives named in the Summary compensation table, as disclosed pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission (SEC). The Firm repaid the TARP funds as soon as it was permitted to do so, on June 17, 2009.

Although the Firm is no longer required to do so, because of the current level of interest in executive compensation we are submitting to shareholders an advisory vote on both the Firm’s compensation principles and practices and their implementation for 2009. Please see Proposal 3 at page 33.

Compensation recovery policies –Our compensation recovery policies go beyond Sarbanes-Oxley and other minimum requirements. In addition to our long standing Board policy on recoupment in the event of a material restatement of the Firm’s financial results or a termination for cause, we have implemented provisions in 2009 and 2010 that enable cancellation or recovery if the award was based on materially inaccurate performance metrics or a misrepresentation by an employee, the employee engaged in conduct that causes material financial or reputational harm to the Firm or its business activities, or, for certain senior employees, the employee failed to properly identify, raise or assess risks material to the Firm or its business activities. These policies are further described in the Compensation Discussion and Analysis section at page 12 and in Appendix D.

Majority voting for directors –In 2007, the Board amended the Firm’s By-laws to provide a majority voting standard for election of directors in uncontested elections (resignation by any incumbent director who is not re-elected) and plurality voting in any election that is contested.

Board leadership structure –JPMorgan Chase is governed by a Board of Directors. Directors discharge their duties at Board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer (CEO), management and others regarding matters of concern and interest to the Firm. Specific elements of our Board leadership structure are outlined in Appendix A and include:

Board’s role in risk oversight –The Firm’s risk management is described in the Management discussion and analysis of the Annual Report starting at page 86. As stated there, risk is an inherent part of JPMorgan Chase’s business activities and the Firm’s overall risk tolerance is established in the context of the Firm’s earnings power, capital, and diversified business model. The Firm’s risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of the major risks inherent in its business activities. The Firm’s risk governance structure starts with each line of business being responsible for managing its own risks, with its own risk committee and a chief risk officer to manage its risk. Overlaying the line of business risk management are four corporate functions with risk management-related responsibilities. Risk Management is responsible for providing an independent firmwide function of risk management and controls and is headed by the Firm’s Chief Risk Officer, who is a member of the Firm’s Operating Committee and reports to the Chief Executive Officer and the Board of Directors, primarily through the Board’s Risk Policy Committee. The Chief Investment Office and Corporate Treasury are responsible for managing the Firm’s liquidity, interest rate and foreign exchange risk. Legal and Compliance has oversight for legal and fiduciary risk.

The Board of Directors exercises its oversight of risk management principally through the Board’s Risk Policy Committee and Audit Committee. The Risk Policy Committee oversees senior management risk-related responsibilities, including reviewing management policies and performance against these policies and related benchmarks. The Audit Committee reviews with management the system of internal controls and financial reporting that is relied upon to provide reasonable assurance of compliance with the Firm’s operational risk management processes. In addition, the Compensation Committee is responsible for reviewing the Firm’s compensation practices and the relationship among risk, risk management and compensation in light of the Firm’s objectives. Each of the committees oversees reputation risk issues within their scope of responsibility. The Board of Directors also reviews selected risk topics directly as circumstances warrant.

Non-management director meetings –Non-management directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.

Code of Conduct and Code of Ethics for Finance Professionals –The JPMorgan Chase has a Code of Conduct that sets forthis a collection of rules and policy statements governing employees’ conduct in relation to the guiding principles and rules of behavior by which we operate our company and conduct our daily business with our customers, vendors and shareholders and with our fellow employees. The Code of Conduct applies to all directors and employees of the Firm.Firm’s business. In addition, the Firm has a Code of Ethics for Finance Professionals that applies to the Chairman and CEO, Chief Financial Officer (CFO) and Chief Accounting Officer of the Firm and to all other professionals serving in a finance, accounting, corporate treasury, tax or investor relations role. The purpose of the Code of Ethics for Finance Professionals is to promote honest and ethical conduct and compliance with the law, particularly as related to the maintenance of the Firm’s financial books and records and the preparation of its financial statements. The Code of Conduct and Code of Ethics for Financial Professionals can be found on our Web site at www.jpmorganchase.com under Governance.

Political contributions and legislative lobbying –The Board-approved policy regarding political contributions and legislative lobbying activities, the JPMorgan Chase & Co. Political Contributions Statement, was adopted in 2006 and is postedavailable on our Web site at www.jpmorganchase.com under Governance.site. The Firm also posts on its Web site an annual report of contributions made by its Political Action Committees.

Bonus recoupment –The Board’s policy on bonus recoupment in the event of a restatement of financial results is stated within the Corporate Governance Principles which are available on our corporate Web site. The Firm also has other recoupment policies as described at page 19.

Policy on director nomination process –The Board’s Governance Committee is responsible for evaluating and recommending to the Board proposed nominees for election to the Board of Directors. As part of its process, the Governance Committee will consider director candidates recommended for consideration by members of the Board, by management and by shareholders. Shareholders wishing to recommend to the Governance Committee a candidate for director should write to the Secretary at: JPMorgan Chase & Co., Office of the Secretary, 270 Park Avenue, New York, New York 10017.

It is the policy of the Governance Committee that candidates recommended by shareholders will be considered in the same manner as other candidates and there are no additional procedures a shareholder must undertake in order for the Committee to consider such shareholder recommendations. As stated in the Corporate Governance Principles, the Board wishes to balance in general the needs for professional knowledge, business expertise, varied industry knowledge, financial expertise, and CEO-level business management experience. The Board also strives to ensure diversity of representation among its members. The Governance Committee also takes into account criteria applicable to Board committees.

Board communications –Shareholders and interested parties who wish to contact any Board members or committee chairs, the Presiding Director, or the non-management directors as a group, may mail correspondence to: JPMorgan Chase & Co., Attention (name of Board member(s)), Office of the Secretary, 270 Park Avenue, New York, New York 10017.

Documents available –The Corporate Governance Principles, Code of Conduct and Code of Ethics for Finance Professionals, as well as10017 or e-mail the charters of our principal Board committees, can be found on our Web site at www.jpmorganchase.com under Governance. These documents will also be made available to any shareholder who requests them by writing to the Secretary at: JPMorgan Chase & Co., Office of the Secretary 270 Park Avenue, New York, New York 10017.at corporate.secretary@jpmchase.com.

Shareholder outreach –We recognize the importance of shareholder communications to help our investors understand our performance and strategies. We reach out to shareholders in many different ways, including through quarterly earnings presentations, SEC filings, web communications, and investor meetings. In addition, our senior executives engage the Firm’s shareholders more informally as part of a semi-annual outreach program to invite comments on governance matters, executive compensation, and shareholder proposals. We meet throughout the year with shareholders and organizations interested in our practices.

Director independence

Pursuant to the corporate governance listing standards of the NYSE, a majority of the Board of Directors (and each member of the Audit, Compensation and Governance Committees) must be independent. The Board of Directors may determine a director to be independent if the director has no disqualifying relationship as defined in the NYSE corporate governance rules and if the Board has affirmatively determined that the director has no material relationship with JPMorgan Chase, either directly or as a partner, shareholder, officer or employee of an organization that has a relationship with JPMorgan Chase. In connection with the assessment of director independence, the relationships set forth in Appendix AB are deemed immaterial unless the Board otherwise determines. Criteria respectingrelating to director independence may also be found in the Corporate Governance Principles on our Web site at www.jpmorganchase.com under Governance.site.

The Board of Directors reviewed the relationships between the Firm and each director and determined that in accordance with the NYSE corporate governance listing standards and the Firm’s independence standards, each non-management director (Crandall C. Bowles, Stephen B. Burke, David M. Cote, James S. Crown, Ellen V. Futter, William H. Gray, III, Laban P. Jackson, Jr., David C. Novak, Lee R. Raymond and William C. Weldon) has only immaterial relationships with JPMorgan Chase and accordingly each is an independent director under these standards. There are additional objective tests for independence in the NYSE rules and each of the named directors meets these objective tests for independence as well. Under the NYSE rules, a director employed by the Firm cannot be deemed to be an independent director, and consequently, James Dimon is not and Robert I. Lipp was not an independent director of JPMorgan Chase.

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In making its determinations concerning director independence, the Board considered the following transactions between the Firm and each director, the director’s immediate family members and any such person’s principal business affiliations: extensions of credit made by bank subsidiaries of the Firm; financial products and services provided by subsidiaries of the Firm; business transactions for property or services contracted for by subsidiaries of the Firm; and charitable contributions made by the Firm, directly or through its Foundation, to any non-profit organization of which a director is employed as an officer. In particular, the Board considered: for directors Futter and Jackson, extensions of credit provided to them; for directors Bowles, Burke, Cote, Crown, Futter, Jackson, Novak, Raymond and Weldon, credit cards issued to them and their immediate family members; for director Bowles, extensions of credit and other financial services provided to Springs Industries, Inc. and its subsidiaries, and to The Springs Company;subsidiaries; for director Burke, extensions of credit and other financial services provided to Comcast Corporation and its subsidiaries; for director Cote, extensions of credit and other financial services provided to Honeywell International Inc. and its subsidiaries; for director Crown, extensions of credit and other financial services provided to Henry Crown and Company and other Crown family ownedfamily-owned entities; for director Futter, extensions of credit and other financial services provided to the American Museum of Natural History; for director Novak, extensions of credit and other financial services provided to Yum! Brands, Inc. and its subsidiaries; and for director Weldon, extensions of credit and other financial services provided to Johnson & Johnson and its subsidiaries. The Board also considered the following business relationships: for director Cote, purchases of building safety and security equipment and maintenance services from Honeywell International Inc.; and employment since October 2009 of an adult son of Mr. Cote as a non-executive officer of the Firm; for director Crown, leases of office space and a lease of retail space from subsidiaries of companies in which Mr. Crown and members of his immediate family have indirect ownership interests; for director Weldon, antransitional services related to a 2008 acquisition by the Firm’s private equity division of a business of a subsidiary of Johnson & Johnson; and for directors Burke, Crown Futter and Gray,Futter, charitable contributions to charitable organizations where those directors servedserve as an officer or trustee.

Committees of the Board

The Board has five principal committees. The charter of each committee can be found on our Web site at www.jpmorganchase.com under Governance.Governance under the About Us tab. Each member of the Audit Committee, the Compensation Committee and the Governance Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and within the meaning of regulations of the Securities and Exchange Commission (SEC).SEC.

Audit Committee –provides oversight of the independent registered public accounting firm’s qualifications and independence; the performance of the internal audit function and that of the independent registered public accounting firm; and management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of the Firm, assure the integrity of the Firm’s financial statements, assure compliance with the Firm’s operational risk management processes, and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations. The Board of Directors has determined that Mrs.Ms. Bowles and Mr. Jackson are audit committee financial experts as defined by the SEC.

Compensation & Management Development Committee –reviews and approves the Firm’s compensation and benefit programs; ensures the competitiveness of these programs; and advises the Board on the development of and succession for key executives. The Compensation Committee periodically reviews and approves a statement of the Firm’s compensation practices and principles and also reviews the relationship among risk, risk management and compensation in light of the Firm’s objectives, including its safety and soundness and the avoidance of practices that would encourage excessive risk. Information on the Committee’s processes and procedures for consideration of executive compensation are addressed in the Compensation Discussion and Analysis at page 9.12.

Corporate Governance & Nominating Committee –exercises general oversight with respect to the governance of the Board of Directors, including reviewing the qualifications of nominees for election to the Board and making recommendations to the Board regarding director compensation.

Public Responsibility Committee –reviews and considers the Firm’s position and practices on charitable contributions, community development, legislation, protection of the environment, shareholder proposals involving issues of public interest and public responsibility and other similar issues as to which JPMorgan Chase relates to the community at large, and provides guidance to management and the Board as appropriate.

Risk Policy Committee –provides oversight of the CEO’s and senior management’s responsibilities to assess and manage the Firm’s credit risk, market risk, interest rate risk, investment risk, liquidity risk, reputational risk, and fiduciary risk.

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Director meeting attendance

The following table summarizes the membership of the Board and each of its principal committees, and the number of times each met during 2008:2009:

During 2008,2009, the Board met 1811 times; each director attended 75% or more of the total meetings of the Board and the committees on which he or she served. With respect to the annual meeting of shareholders held May 19, 2009, two directors participated by teleconference; all other nominees were present at the meeting.

Director compensation

Annual compensation –The Board believes it is desirable that a significant portion of director compensation be linked to the Firm’s common stock, and the Board’s total compensation includes approximately one-third cash and two-thirds stock-based compensation. In 2008,2009, each non-management director received an annual cash retainer of $75,000 and an annual grant, made when annual employee incentive compensation was paid, of deferred stock units valued at $170,000 on the date of grant. The director retainer and annual grant amounts have not changed since 2004.2003.

Each deferred stock unit represents the right to receive one share of the Firm’s common stock and dividend equivalents payable in deferred stock units for any dividends paid. Deferred stock units have no voting rights. In January of the year immediately following a director’s termination of service, deferred stock units are distributed in shares of the Firm’s common stock in either a lump sum or in annual installments for up to 15 years as elected by the director.

Each director who is a member of the Audit Committee receives an additional annual cash retainer of $10,000. Each chair of a board committee receives an additional fee of $15,000 per year. Directors who are officers of the Firm do not receive any fees for their service as directors.

The following table summarizes annual compensation for non-management directors.

Stock ownership guidelines –As stated in the Corporate Governance Principles, directors pledge that, for as long as they serve, they will retain all shares of the Firm’s common stock purchased on the open market or received pursuant to their service as a board member.

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Deferred compensation –Each year non-management directors may elect to defer all or part of their cash compensation. A director’s right to receive future payments under any deferred compensation arrangement is an unsecured claim against JPMorgan Chase’s general assets. Cash amounts may be deferred into various investment equivalents, including deferred stock units. Upon retirement, compensation deferred into stock units will be distributed in stock; all other deferred cash compensation will be distributed in cash. Deferred compensation will be distributed in either a lump sum or in annual installments for up to 15 years as elected by the director commencing in January of the year following the director’s retirement from the Board.

Reimbursements and insurance –The Firm reimburses directors for their expenses in connection with their board service. We also pay the premiums on directors’ and officers’ liability insurance policies and on travel accident insurance policies covering directors as well as employees of the Firm.

20082009 Director compensation table –The following table shows the compensation expensed for each director in 2008.2009.

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Security ownership of directors and executive officers

The following table shows the number of shares of common stock and common stock equivalents beneficially owned as of February 28, 2009,2010, including shares that could have been acquired within 60 days of that date through the exercise of stock options or stock appreciation rights (SARs), together with additional underlying stock units as described in note 3 to the table, by each director, the current executive officers named in the Summary compensation table, and all directors and executive officers as a group. Unless otherwise indicated, each of the named individuals and each member of the group has sole voting power and sole investment power with respect to shares owned. The number of shares beneficially owned, as that term is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as of February 28, 2010, by all directors and executive officers as a group totals approximately 1% of our outstanding common stock as of February 28, 2009;and by each director and named executive officer individually ownsis less than 1% of our outstanding common stock.

We have been notified by BlackRock, Inc. (BlackRock), 40 East 52nd Street, New York, NY 10022, that, as of December 31, 2009, it, in its capacity as a parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G), is the beneficial owner of 239,705,824 shares of our common stock, representing 5.84% of our outstanding common stock. According to the Schedule 13G dated January 20, 2010, filed with the SEC, in the aggregate, BlackRock and the affiliated entities included in the Schedule 13G have sole dispositive power and sole voting power over 239,705,824 shares.

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6	William T. Winters was not an executive officer effective September 30, 2009; his ownership is not included in this table.

Compensation Discussion and Analysis

Summary

In this section we will review our compensation practices, the Firm’s performance for 2008, and the compensation of our Named Executive Officers and certain other members of our Operating Committee. We recognize that many people are concerned about compensation practices across the financial services industry, and we think some of those concerns are quite legitimate. There is considerable public discussion regarding appropriate approaches to compensation, including efforts to ensure that compensation policies and practices are consistent with effective risk management. We support this objective and believe that our current disciplined practices reflect responsible compensation, effective risk management and accountability to shareholders. We continually review our practices.

Although JPMorgan Chase differentiated itself from other large financial services firms by its performance during the difficult conditions of 2008, the overall financial performance of the Firm was disappointing on an absolute basis.As discussed below, our CEO, Mr. Dimon received no cash bonus, no restricted stock and no SARs. For our Operating Committee as a whole, aggregate incentive compensation paid annually in cash and RSUs declined 72% from 2007.

Our compensation practices are responsible.We have long adhered to practices that are designed to reward long-term performance, not just revenues, and are aimed at aligning employee and shareholder interests. Before the U.S. Treasury’s TARP program was conceived, we used a multi-year approach to compensation, considered risk management as part of our performance evaluations, had a bonus recoupment policy beyond that required under Sarbanes-Oxley, and did not use golden parachutes or many other perquisites. We have always paid a significant percentage of our incentive compensation in deferred stock (50% or more for our most senior management group) and require this group to hold 75% of their stock until retirement. The senior management group cannot hedge their holdings of JPMorgan Chase common stock, and after retirement executives typically continue to have substantial holdings of company stock through RSUs that vest over a period of years, shares received from option exercises that must be held for at least five years from the grant date of options awarded in 2005 and later, and options that depend on the share price for their value.

Compensation is determined by weighing multiple criteria based on business judgment.Compensation of our most senior executives reflects their experience and scope of responsibility for leading lines of business or key functions. The overall level of compensation also reflects the actual and potential impact of the person and his or her position on the Firm’s results. Where available, we use market competitive data to inform, not override, our focus on pay for performance. Compensation for the most senior management consists primarily of fixed salary and an annual variable component that we refer to as incentive compensation. In determining the variable component, we consider multiple quantitative and qualitative criteria and rely on business judgment to determine appropriate compensation to recognize the contribution and potential of our leaders. We do not use formulaic approaches tied to total shareholder return or other narrow measures. We believe such approaches do not capture the complexity of the objectives of senior management, can cause too limited a focus on actions that will affect the performance measurement, and have the potential to create undue risk from actions designed to maximize payouts under whatever formula may be chosen.

Variable compensation is part of our on-going compensation program,not a perquisite for senior officers and investment bankers. It is an important element of compensation for employees across the Firm, including retail branch and credit card personnel, technology experts, and compliance and support professionals.

Compensation practices are consistent with effective risk management.The Compensation Committee has reviewed with the Firm’s Chief Risk Officer the risks that the Firm faces and elements of our organizational structure, management practices and compensation programs that would discourage unnecessary or excessive risk-taking. In this regard, risk management is an integral part of the Firm’s culture: the Chief Risk Officer is a direct report to the CEO, employee appraisals take into consideration sound risk management, compliance sits outside of the business to ensure separation of management and oversight, and front office managers cannot exert undue influence over the incentive pools of operations groups. We also believe that it is consistent with effective risk management that variable compensation awards are discretionary, not formulaic, and are based on the performance of the individual, the relevant line of business and the Firm as a whole. Performance is also based on profits and risk-adjusted returns that add to the long-term value of the franchise, rather than just revenues. Members of the Firm’s Executive Committee are also subject to a 75% share retention policy as described at page 19.

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We will modify compensation practices as required by TARP and the Capital Purchase Program.JPMorgan Chase is a participant in the Capital Purchase Program established by the U.S. Treasury (Treasury) under the Treasury’s Troubled Asset Relief Program. Although the Firm did not seek the Treasury’s investment, we recognized the importance of supporting the uniform application of the Capital Purchase Program to promote stability and confidence in the financial markets and supported the government’s goal of obtaining the participation of all major banks. The funds we received strengthened our already strong capital base.

As a participant in the Capital Purchase Program, we are subject to the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 (EESA), as amended by The American Recovery and Reinvestment Act of 2009. These provisions require affected financial institutions to meet certain standards for executive compensation and corporate governance, some of which require the establishment of standards by the Secretary of the Treasury. In general, these provisions are applicable during, or relate to, the period that the Treasury holds an investment in the financial institution and include certain limits on compensation, including limits that exclude incentives for senior executive officers to take unnecessary and excessive risks that threaten the value of the financial institution; provision for the recovery by the financial institution of any bonus or incentive compensation paid to a senior executive officer or certain other officers based on statements of earnings, revenues, gains, or other criteria that are later proven to be materially inaccurate; a prohibition of certain payments (golden parachute payments) to its senior executive officers or certain other officers; and a limit on deduction for federal income tax purposes to $500,000 annually for each senior executive officer during the applicable period. We will comply with all applicable provisions of EESA and applicable regulations.

EESA also requires that participants in the Capital Purchase Program permit shareholders to have a separate advisory vote to approve the compensation of executives, as disclosed pursuant to the rules of the SEC, including the Compensation Discussion and Analysis section is intended to respond to SEC disclosure requirements and provide shareholders and investors with information related to governing and administering our compensation programs. Our intent is to be very transparent on our structure, philosophy and approach. We believe we have taken a prudent and effective approach to compensation for a number of years and our practices were already substantially in line with what regulators have been recommending following the compensation tablesrecent financial crisis.

This section is in three parts: The first part, entitled Management’s view on the Firm’s performance, discusses our overall assessment of absolute and related material. We have included this as Proposal 3 at page 29.

relative performance considerations. The second part, entitled Compensation of thedecisions for Named Executive Officers

In determining for 2009, describes the compensation determinations made for our named executives for performance year 2009. The third part, entitled Philosophy and approach of our compensation framework, provides greater detail on our compensation approach, structure, philosophy, and practices.

Management’s view on the Firm’s performance

An overview of the Named Executive Officers and of other members of the Operating Committee, the Compensation Committee considered the performance offor the Firm as a whole and offor each line of business, as well as individual executive performance.and a comparison of 2009 performance against results for previous years on certain key operating metrics, is at Appendix C, pages 47-49.

The Firm reported 2009 net income of $11.7 billion, an increase of $6.1 billion, or 109%, from the prior year. Though these results showed improvement, they did not achieve the Firm’s management demonstrated extraordinary capability, dedication and stewardship in guidingfull earnings potential. In 2009 we continued to distinguish ourselves as a premier Firm. Despite the challenging environment, the Firm throughwas successful in many fundamental areas, including the difficult conditionsfollowing:

Compensation decisions for Named Executive Officers for 2009

How we compensate our top leadership sets the tone for how we administer pay within the Firm. For 2009, our Board and Compensation Committee considered numerous factors (including those highlighted above) before deciding on the appropriate incentives for the CEO and the other Named Executive Officers, in the context of the current business, operating and regulatory environment.

Determining our CEO’s compensation for 2009

James Dimon.Mr. Dimon has demonstrated not only strong and sustained leadership of the Firm throughout the financial crisis, but has provided meaningful and globally recognized leadership of our industry as well.

Throughout 2008 and into 2009, Mr. Dimon guided the Firm to prepare for the possibility of extremely severe financial and economic circumstances and to enable it to continue in a position of strength even if such circumstances had come to pass. The Firm’s capabilities in these circumstances reflected multi-year adherence to demanding standards for capital and liquidity, management systems, and trade processing capability, among others. Mr. Dimon also guided the Firm to think beyond the crisis and to continue serving the Firm’s customers while considering new investment for the future. Despite the tumultuous year, the Firm was profitable overall in every quarter of 2008. Notwithstanding these accomplishments, however, the overall financialquarter.

With respect to his performance ofand contributions to the Firm was disappointing on an absolute basis, largely due to rapidly escalating credit costs and markdowns of certain leveraged lending and mortgage-related exposures.

The Compensation Committee also took note of the actions of the Treasury, including their investment in the Firm and in other financial institutions to promote stability and confidence in the financial system and help restore the country’s economy.

Under these challenging circumstances, the following compensation actions were taken:for 2009, Mr. Dimon:

By comparison, Mr. Dimon the CEO, did not receive a bonusreceived no incentive compensation for 2008, (no cash bonus or restricted stock) nor was he awarded any SARs.The Compensation Committee and only his base salary.

Determining our other NEOs’ compensation for 2009

Each Named Executive Officer reports directly to Mr. Dimon judged that on an absolute basis, the financial performance of the Firm, while still profitable, was well short of the goal for the year and the Compensation Committee decided there would be no bonus for the year. The Compensation Committee and the Board of Directors took note, however, of the overall performanceruns a major business or function of the Firm and strongly commendedis part of the Operating Committee, comprising the Firm’s senior most executive officers. Mr. Dimon, along with the Compensation Committee and Board, establishes the priorities for his highly effective leadershipeach executive and assesses their performance annually.

Their priorities generally include a robust set of the Firm through a very challenging environment, as well as his thoughtful efforts to contribute to the stability of our financial system.

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In making its determinations, comparativeAsset Management business and in Investment Banking in 2009, he received total compensation dataof $9,890,100 in the form of a $500,000 base salary, a $2,000,000 cash incentive award, and $7,390,100 in equity incentives in the form of restricted stock units and stock appreciation rights.

William Winters.Mr. Winters was co-CEO of the Investment Bank through September 30, 2009. As further described at page 28, a separation agreement was entered into with Mr. Winters that provided to the Compensation Committee by the Executive Compensation unitthat he would receive an amount of Corporate Human Resources, but under current market circumstances the Compensation Committee did not consider available dataincentive compensation in respect of 2009 intended to be relevant.economically equivalent to that which Mr. Black received.

Compensation actions –The following table shows annual salary in 20082009 and annual incentive compensation awarded in January2010 for 2009 for 2008 performance, which reflects the Compensation Committee’s view of its annual compensation actionsdeterminations for 2008.2009. The table also shows periodic equity awards granted in January 20092010 that are separate from annual compensation. The SCTSummary compensation table (SCT) required by the SEC is at page 20.22.

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Annual and periodic compensation

The above table is presented to show how the Compensation Committee viewed compensation actions, but it differs substantially from the SCT required by the SEC and is not a substitute for the information required by the SCT onat page 20.22.

The SCT shows compensation information in a format required by the SEC. One major differenceThere are two principal differences between the SCT and this 2008the above table:

Philosophy and approach of our Named Executive Officers, depending upon their eligibility for vestingcompensation framework

Our compensation philosophy, practices and principles are an important part of equity awards based on certain ageour business strategy in helping to attract and service requirements as described in note 2 toretain the SCT.

Periodic equity awards –In January 2009, the Named Executive Officers (except the CEO) and other key officers of the Firm were granted equity awards in the form of SARs. We consider such awards to be separate from annual compensation. Awards were granted to recognize the key role of recipients in determining and executing the Firm’s objectivesemployees we need and to reinforceprovide a control framework for the partnerships that will help produceelements of compensation we use and the processes to implement and maintain a reasonable and appropriately balanced approach to compensation. Critical to JPMorgan Chase’s long-term success is our ability to attract and retain employees with the skills and talent we need to create sustained value for the Firm and its shareholders. SARs were awarded rather than RSUsOur current and potential talent pool is highly marketable and can be attracted to provideopportunities across a broad spectrum of regulated and unregulated financial services businesses. Our competition for talent not only includes other global banks, investments banks, regional/local banks, and asset managers, but also boutique investment firms, hedge funds and private equity firms.

We have long tried to maintain a set of practices and principles marked by fiscal discipline, sufficient flexibility to attract and retain talent, and attention to safety and soundness. We believe that we have been at the forefront of sensible compensation opportunity based solely on increasespractices with well-designed incentives that can and should remain an effective component of our total compensation approach. Although we refine our compensation programs as conditions change, we strive to maintain consistency in the share price from the dateour philosophy and approach.

We have a rigorous performance and compensation management system that we believe to be aligned with global regulatory principles. Appendix D is a statement of grant.

These SARs will become exercisable 20% per year over the five-year period from the date of grant. All shares obtained upon exercise must be held until the fifth year after grant and thereafter become subject to the Firm’s 75% retention requirement. Grants to members of the Operating Committee are subject to the new conditions described at page 11 for RSUsCompensation practices and SARs granted in January 2009.

Additional information on our compensation programs

Shareholders should expect the Firm to use its compensation resources wiselyprinciples, which articulates how we operate and resourcefully to build long-term value creation. Wefurther demonstrates why we believe that our compensation philosophyprocesses and program approachprograms are consistentaligned with this expectation. The success ofsafety and soundness principles. These beliefs help build the following foundation for our compensation program should be measured by the long-term performance of JPMorgan Chase since the program is intended to reinforce strong and sustainable financial performance, operational discipline and shareholder value creation. The following section provides additional detail on our compensation programs.

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JPMorgan Chase executive compensation practices

We define and communicate our objectives for long-term value creation.approach:

Compensation is determined by weighing multiple criteria, including non-financial metrics.Independent Board oversight.

Executive compensation is tied to long-term performance of the Firm.

Equally important as what we believe is how we act. In the past year, we undertook extensive internal reviews of stock options.

Compensationprograms in light of the global economic environment, proposed and enacted legislation, and global regulatory initiatives. We have examined our policies and practices against multiple sources of regulatory guidance, and believe that our principles and practices are substantially consistent with effectiverecommended approaches.

And over the past several years, we have taken certain actions and implemented various features in our compensation programs to help mitigate risk management.and improve the alignment to sensible and sound practices.

Highlights of some changes introduced in 2009 and 2010 include the following:

There are no golden parachutes or special severance plans.

There are no special executive benefits.

Our clawback policies provide accountability.

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Elements of executive compensation

The key components of our executive compensation program provide a holistic approach to deliver the appropriate level of total compensation. Annual compensation includes base salary and the cash portion of annual incentives. Long-term compensation includes the deferred equity portion of annual incentives and any periodic equity awards. A list of the compensation and benefits elements as they relate to senior executives of the Firm is found in the following table.

Provides a measure of certainty and predictability to meet certain living and other financial commitments.

As part of our internal review of compensation practices we reconfirmed the value of continuing risk management’s involvement in compensation planning and have further institutionalized their involvement in our compensation process and planning. Management has also continued to look at the evolution of performance-based deferrals and will continue to consider this mechanism depending on the fit with the Firm’s strategic direction and the need to respond competitively within our industry.

PhilosophyJPMorgan Chase’s compensation framework is supported by our corporate governance and approachboard oversight.

Authorities and responsibilities –In addition to approving compensation for Operating Committee members, the Compensation Committee approves the formula, pool calculation and performance goals for the shareholder approved Key Executive Performance Plan (KEPP) as required by Section 162(m)(1) of the Internal Revenue Code, reviews line of business total incentive accruals versus performance throughout the year, approves final aggregate incentive funding, and approves total equity grants under the Firm’s long-term incentive plan and the terms and conditions for each type of award. The Compensation Committee has delegated authority to the Director Human Resources to administer and amend the compensation and benefits programs.

Compensation review processes –Compensation of Operating Committee members depends not only on how they as individuals perform, but also on how the Firm as a whole performs. We assess their specific performance based on short-, medium- and longer-term objectives tailored to specific lines of business and functional areas.

Our long-term success asdisciplined compensation processes involve a premier financial services firm dependsseries of reviews and assessments by successive levels of management within lines of business, the Operating Committee, the CEO, the Compensation Committee and the Board of Directors. The CEO presents his assessment of individual performance and a recommended set of compensation actions for the other Operating Committee members to the Compensation Committee for their consideration. The Compensation Committee discusses the CEO’s compensation entirely in large measure onits independent executive session and seeks full Board ratification of its determinations. No member of the talents of our employees. Our compensation system playsOperating Committee other than the CEO has a significant role in our ability to attract, retain and motivate the highest quality workforce. The principal underpinnings of that system are an acute focus on performance, shareholder alignment,making a sensitivityrecommendation to the relevant market place, and a long-term orientation. Based on our viewCompensation Committee as to the compensation of any member of the current competitive landscape, this has never been as compelling or as important as it is right now.Operating Committee.

Performance –For senior level employees, a significant portion of compensation should be, and is, variable, and the Firm seeks real differentiation in compensation among our most senior employees based on their accomplishments.

As a general matter, in assessing performance, we consider:

The performance criteria we consider include a robust set of quantitative and qualitative factors focused on financial performance, management effectiveness, growth, people developmentleadership skills, proper investing in the business, innovation and risk/control management. While specific factors will differ from business to business, function to function, and during different business cycles, among the most important factors that commonly apply are:

The Compensation Committee considers these factors in total. While we believe our approach is disciplined, it is not formulaic. We rely on our business judgment to determine the most appropriate compensation to recognize the contributions and potential of our leaders. In view of the wide variety and complexity of factors considered in connection with its evaluation of the Firm, business and individual executive performance, the Compensation Committee does not find it useful, and does not attempt, to rank or otherwise assign relative weight to these factors. Executive performance must be sustained at the highest levels over multiple time periods, and superior performance must be achieved across multiple factors to be considered outstanding. In considering the factors described above, individual members of the Compensation Committee and the Board of Directors may have given different weight to different factors.

Overview of 2008 performance –The Firm’s business results are discussed in detail in the Annual Report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Annual Report. The Firm also reviews its business and priorities in an annual Investor Day, most recently held February 26, 2009. The Annual Report and presentation materials for the 2009 Investor Day may be found on our Web site at www.jpmorganchase.com under Investor Relations.

An overview of the performance for the Firm as a whole and for each line of business is at pages 16 and 17. A comparison of 2008 performance against results for previous years on certain key operating metrics is at page 43, Appendix B.

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Overview of 2008 performance

JPMorgan Chase differentiated itself from other large financial services firms.

The Firm reported 2008 net income of $5.6 billion, compared with $15.4 billion in 2007. These results were disappointing in absolute terms, but in relative terms should be considered within the context of a number of benchmarks and achievements, including:

Investment Bank

Total net income was a loss of $1.2 billion, driven by lower total net revenue, a higher provision for credit losses and higher noninterest expense. Total net revenue was down 33% from the prior year, reflecting, among other things, reduced market activity (investment banking); markdowns on mortgage-related exposures and on leveraged lending funded and unfunded commitments, partially offset by record performance in rates and currencies, credit trading, commodities and emerging markets (fixed income markets); and weak trading results, partially offset by strong client revenue across products, including prime services (equity markets). Notwithstanding the decline in financial results, the Investment Bank achieved the following:

Retail Financial Services

Total net income decreased 70% from the prior year, primarily reflecting a significant increase in the provision for credit losses, partially offset by positive mortgage servicing asset risk management results and the positive impact of the Washington Mutual transaction. 2008 highlights and accomplishments include:

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Card Services

Net income declined 73% from 2007, driven by a significantly higher provision for credit losses, partially offset by higher total net revenue. 2008 highlights and accomplishments include:

Commercial Banking

Net income in 2008 was a record and increased 27% from 2007, due to record total net revenue and the impact of the Washington Mutual transaction, partially offset by a higher provision for credit losses. 2008 highlights and accomplishments include:

Treasury & Securities Services

Net income was a record and increased 26% from 2007 driven by higher total net revenue, partially offset by higher noninterest expense. 2008 highlights and accomplishments include:

Asset Management

Net income declined 31% from 2007, driven by lower total net revenue offset partially by lower noninterest expense. 2008 highlights and accomplishments include:

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Shareholder-alignment –We believe that an ownership stake in the Firm best aligns our employees’ interests with those of our shareholders.

Our compensation programs are designed to annually deliver a meaningful portion of total compensation in equity to employees who can have the greatest impact on the bottom line and to increase for our most senior employees the equity portion of their compensation to strengthen their alignment with shareholders. JPMorgan Chase pays a larger portion of our executive compensation in equity-based long-term incentives when compared to many companies in our comparison group. Employees whose incentive compensation is $20,000 receive 10% in the form of RSUs. The percentage awarded as RSUs increases as compensation increases. That enhanced alignment to shareholder interests is deliberate and focuses executive activities and decisions on those areas that increase shareholder value. We further believe that competitive, annual equity awards subject to multi-year vesting and termination/forfeiture provisions effectively emphasize the long-term view of our business and bolster the retention of our top talent.

Our policies require share ownership for directors and executive officers and encourage continued ownership for others. Directors pledge to retain all shares of JPMorgan Chase while they serve as a director. Senior executives are expected to establish and maintain a significant level of direct ownership. Mr. Dimon and other members of the Operating Committee are required to retain at least 75% of the shares they receive from equity-based awards, including options, after deduction for option exercise costs and taxes; members of the Executive Committee who are not members of the Operating Committee are required to retain at least 50% of such shares. The retention requirement does not apply to shares received as part of incentive compensation in excess of the percentage that would be received under the firmwide stock-cash table generally applicable to employees at such incentive compensation level. Executives are subject to these retention requirements during their service on such committees; any exceptions are subject to approval by the General Counsel. In 2009, the Firm reduced the applicable retention requirement for members of Executive Committee who are not members of the Operating Committee from 75% to 50% of the shares they receive during their service on such committee to balance an increase in the percentage of equity awarded as part of incentive compensation.

Relevant market placeNo hedging –We use comparison groups,Directors and members of the Operating Committee and the Executive Committee are not permitted to sell short or benchmarking, to understand market practices and trends, to evaluatehedge the competitivenesseconomic risk of their ownership of our programs and to assess the efficiency of these programs. Each of our lines of business operates under our overall compensation framework, but uses compensation programs appropriate to its competitive environment. Given the diversity of our businesses, our global operations and the complexity of the products and services we provide, our comparison group is also diverse, global and complex.shares.

As a result, the Compensation Committee generally reviews actual compensation levels, generally from public data, for companies that either directly compete with us for business and/or talent or are global organizations with similar scope, size or other characteristics to JPMorgan Chase. Because we view ourShareholdings of directors and executive officers as highly talented executives capable of rotating amongare shown in the leadership positions of our businesses and key functions, we also place importance on the internal pay relationships among members of our Operating Committee.

The Compensation Committee did not engage the services of a compensation consultant in 2008.

Below the level of our most senior officers, our businesses generally benchmark against direct business competitors, while functional areas benchmark against a blend of financial services and large, globally integrated businesses. We view benchmarking as important for an understanding of the market, but we use market factors to inform, not override, our focus on pay for performance.

The core comparison companies we generally consider are:table at page 11.

JPMorgan Chase seeks effective controls for designing, implementing, and monitoring incentive compensation.

JPMorgan Chase believes its incentive compensation arrangements are fair and balanced.

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Retail Financial Services The majority of compensation plans at JPMorgan Chase address potential timing conflicts by including payment deferral features. Awards that are deferred into equity have multi-year vesting. By staggering the vesting of equity awards over time, the interests of employees to build long-term, sustainable performance (i.e., quality earnings) are better aligned with the long-term interests of both customers and shareholders.

Additional comparison companies may be used

Long-term orientation –We strive for a long-term orientation both in the way we assess performance and in the way we structure compensation.The aim of our compensation programs and policies is to motivate all employees to attain strong and sustained performance, both on an absolute and relative basis. We achieve this through processes and tools that are clear, transparent and effective at driving behaviors that expand the depth and breadth of our positive impact on clients. Our goal is to significantly differentiate executive compensation through the annual compensation process and through periodic equity awards to appropriately recognize outstanding performance.

Certain features of our compensation programs are targeted to help us achieve individual objectives, and other elements help us achieve multiple objectives simultaneously. Our vesting periods for stock awards generally provide that one-half vests after two years and the balance vests after three years. As a result of these awards, employees share the same interest in the Firm’s long-term success as other shareholders, and we believe that such ownership is a positive factor in retaining key employees. We also use these features to focus executives across all lines of business on longer-term strategy and the overall results of the Firm, particularly at more senior levels where executives can have a greater influence on our long-term success.

Compensation governanceJPMorgan Chase has policies that would permit recovery of incentive compensation awards in appropriate circumstances.

In addition

Additional conditions apply to RSUs and shareholder aligned outcomes.

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Authorities and responsibilities –In additionSARs granted to approving compensation for Operating Committee members the Compensation Committee approves the formula, pool calculationin 2009 and performance goals for the shareholder approved Key Executive Performance Plan (KEPP) as required by Section 162(m)(1) of the Internal Revenue Code, reviews line of business total incentive accruals versus performance throughout the year, approves final aggregate incentive funding, and approves total equity grants under the Firm’s long-term incentive plan and the terms and conditions for each type of award. The Compensation Committee has delegated authority to the Director Human Resources to administer and amend the compensation and benefits programs. The limitations on deductibility for executive compensation specified in Section 162(m)(1) of the Internal Revenue Code are superseded by limitations under the Capital Purchase Program during applicable periods. See the discussion of TARP and the Capital Purchase Program at page 10.2010.

Compensation review processes –Compensation of Operating Committee

•  Attracting, retaining and developing talent is critical to sustaining success

Our compensation programs are intended to attract and retain employees with the skills and talent we determineneed to create sustained value for the Firm and its shareholders.We believe our approach is simple, consistent, effective and understandable. As such, we rely on commonly recognized elements of compensation and we use various design mechanisms to seek to ensure our incentive compensation arrangements are sensitive to risk-taking. In determining our compensation elements and their design, we also review the competitive landscape.

Structure and design –The major elements we use in the core structure and design of our programs are summarized in Appendix E. Our salary programs, compensation levels, cash/stock mix, deferral rates, terms and conditions for equity awards, and the design of business-specific incentives are among the elements we frequently review.

Talent management, development and succession planning –As part of our resolve to focus on long-term sustained value, we look to ensure that it waswe are developing leaders for the future. We have introduced a disciplined process of talent reviews focused on thorough assessments, enhanced executive development programs and rotations of top executives to prepare them for greater responsibility. We are committed to having a strong pipeline to deal with succession for our Operating Committee, including the CEO position.

At least annually the non-management directors make an evaluation of the Chairman and Chief Executive Officer, normally in connection with a review of executive officer annual compensation. Succession planning is also considered at least annually by the non-management directors with the Chief Executive Officer. Generally the Compensation & Management Development Committee considers management development in preparation for discussion by the full Board.

Relevant market place –We use comparison groups, or benchmarking, to understand market practices and trends, to evaluate the competitiveness of our programs and to assess the efficiency of these programs. Each of our lines of business operates under our overall compensation framework, but uses compensation programs appropriate to its competitive environment. Given the diversity of our businesses, our global operations and the complexity of the products and services we provide, our comparison group is also diverse, global and complex.

As a result, the Compensation Committee generally reviews actual compensation levels, typically from public data, for companies that either directly compete with us for business and/or talent or are global organizations with similar scope, size or other characteristics to JPMorgan Chase. Because we view our executive officers as highly talented executives capable of rotating among the leadership positions of our businesses and key functions, we also place importance on the internal pay relationships among members of our Operating Committee.

The Compensation Committee and Board of Directors did not engage the services of a compensation consultant in 2009. The Firm utilized external sources to provide certain compensation data.

Below the level of our most senior officers, our businesses generally benchmark against direct business competitors, while functional areas benchmark against a blend of financial services and large, globally integrated businesses. We view benchmarking as important for an understanding of the market, but we use market factors to inform, not override, our focus on pay for performance and internal equity.

There are no golden parachutes or special severance plans.

There are no special executive officers and the next 20 most highly compensated employees to reimburse the Firmbenefits.

Administrative provisions

Deductibility of executive compensation –To maintain flexibility in compensating executive officers, the Compensation Committee does not require all compensation to be awarded in a tax-deductible manner, but it is their intent to do so to the fullest extent possible and consistent with overall corporate goals. To that end, shareholders re-approved KEPP in May 2008, which covers all executive officers, including the Named Executive Officers, and their annual cash incentive awards and RSUs are delivered under the plan. As a participant in the Capital Purchase Program, the Firm is subject to additional limitations on deductible compensation for federal tax purposes under Section 162(m)(5) of the Internal Revenue Code, including a reduction of the annual limit from $1,000,000 to $500,000 for the deduction of such expenses for certain senior executive officers and the elimination of the performance based exception.

Equity grant practices –Equity grants are awarded as part of the annual compensation process, as periodic long-term awards and as part of employment offers for new hires. In each case, the grant price is not less than the average of the high and the low prices of JPMorgan Chase common stock on the grant date. Grants made as part of the annual compensation process are generally awarded in January after earnings are released and generally in the form of RSUs. RSUs carry no voting rights; however, dividend equivalents are paid on units at the time actual dividends are paid on shares of JPMorgan Chase common stock. Stock options granted by Bank One in 2002 and earlier included a feature that provided for the issuance of restorative options that will remain in effect until expiration of the original option. The Firm no longer grantsdoes not grant options with restoration rights. The Firmrights and prohibits repricing of stock options and SARs.

Continued equity ownership –Compensation & Management Development Committee reportOur policies require share ownership for directors

The Compensation & Management Development Committee has reviewed the Compensation Discussion and executive officersAnalysis and encourage continued ownership for others. Senior executives are expected to establishdiscussed that analysis with management.

Based on such review and maintain a significant level of direct ownership. Mr. Dimon and other members ofdiscussion with management, the Operating Committee and the Executive Committee are required to retain at least 75% of the shares they receive from equity-based awards, including options, after deduction for option exercise costs and taxes. In January 2008 and in January 2009, certain executives received more than 50% of their incentive compensation in the form of RSUs. The retention requirement will not applyrecommended to the excess over 50% when such RSUs vest. Executives are subject to these retention requirements during their service withBoard of Directors that the Firm; any exceptions are subject to approvalCompensation Discussion and Analysis be included in this proxy statement and our Annual Report on Form 10-K for the year ending December 31, 2009. This report is provided as of March 16, 2010, by the General Counsel. Members offollowing independent directors, who comprise the Operating Committee and the Executive Committee are not permitted to sell short or to hedge the economic risk of their ownership of our shares.Compensation & Management Development Committee:

Shareholdings of directors and executive officers are shown in the table at page 8.Lee R. Raymond (Chairman)

Stephen B. Burke

19David C. Novak

William C. Weldon

Executive compensation tables

The following tables and related narratives present the compensation for our Named Executive Officers in the format specified by the SEC.For Mr. Dimon and for each of the other Named Executive Officers, all amounts listed under Stock awards and Option awards for 2008 The below table does not reflect expense recognized in accordance with SFAS 123R forequity awards made in January 20082010 for 2009 performance. The table of Annual and earlier (for performance years prior to 2008). Such amounts do not reflect awards made in January 2009.periodic compensation at page 14 shows how the Compensation Committee viewed compensation actions.

I. Summary compensation table (SCT)