On January 15, 2008, the Board of Directors of JPMorgan Chase & Co. determined to grant Chairman and Chief Executive Officer James Dimon 2,000,000 options in the form of stock appreciation rights. In making this special grant, the Board considered the importance of Mr. Dimon's continuing, long-term stewardship in realizing the Company's potential as a premier financial institution and the extremely competitive environment for leadership talent. The options are not part of Mr. Dimon's regular annual compensation and will not be awarded on a regularly recurring basis. Also, these are the first options awarded to him since he became the Company's CEO on January 1, 2006.

The terms of the grant are distinct from, and are more restrictive than, other equity grants regularly awarded by the Company. These options, which have a ten-year term, will become exercisable no earlier than January 22, 2013, or five years after the effective date of January 22, 2008 (the Effective Date). Moreover, the number of options that will become exercisable (ranging anywhere from none to the full 2,000,000 options granted) and their exercisability date or dates will be determined by the Board based on an assessment of the performance of Mr. Dimon and the Company. That assessment will be made by the Board in the year prior to the fifth anniversary of the Effective Date, relying on such factors that in its sole discretion the Board deems appropriate. Any remaining options not deemed exercisable will be canceled.

The options will have an exercise price equal to the average of the high and low prices of JPMorgan Chase & Co. common stock on the Effective Date. If Mr. Dimon's employment terminates for any reason, all outstanding, unexercisable options will be canceled.