I can't find words to comment on this I am so blown away. Read for yourself:
WaMu Gives New CEO Mega Payout as Bank Fails
Friday, September 26, 2008
Nice work — if you can get fired from it.
That's just what one Alan H. Fishman might have thought when he woke up Friday morning.
Fishman was the new chief executive officer for Washingon Mutual — WaMu — the nation's largest savings and loan, which was taken over Thursday night by federal bank regulators and quickly dumped in a fire sale to JPMorgan Chase for the Wal-Mart-like price of $1.9 billion.
But don't cry for Fishman, who reportedly was sky-high — literally — last night, on a flight from New York to Seattle, when WaMu collapsed. Even though he's only been on the job for less than three weeks, he's bailing out with parachute worth close to $20 million, according to an executive compensation analysis conducted for the New York Times by James F. Reda Associates.
That's right, $20 million for 17 days on the job ... and his company failed.
Fishman, who formerly was chairman of Meridian Capital Group, apparently was much coveted by WaMu, which was counting on him to lead the failing thrift out of mortgage troubles that pushed the bank to a $3.3 billion second-quarter loss.
According to filings with the Securities and Exchange Commission, WaMu threw a $7.5 million bonus at Fishman when it hired him on Sept. 8, and guaranteed him an immediate cash severence of $11.6 million — both of which he gets to keep.
He also was eligible for annual bonuses of up to 365 percent of his annual base pay — set at $1 million — to go with millions of shares of company stock.
Fishman does lose out on a big bonus that would have kicked in had he remained on the job through 2009.
Documents show WaMu was going to pay their new boss $8 million to simply not screw up and get fired — all negotiated as the Seattle-based banking giant's loses climbed to an estimated $20 billion.
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1 comment:
There's only something wrong with this if it is the taxpayer who is paying for his parachute. JPMorgan is one of the few banks with more cash than debt... about $200B in unincumbered cash! They could have easily afforded a buy here, but instead, because they are financially quite savvy, they knew that a panicky triggerhappy government could be coaxed to seize them, and then the assets could be bought at bargain basement prices and WaMu's shareholders get shafted. It's just as likely that S&P and Moody's were influenced to continually hammer WaMu with downgrades to make their seizure inevitable. This situation is a product of the system; decades in the making. The main culprit is the Federal Reserve.
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