CEO of failed WaMu could get millions

International Herald Tribune ^

[Lorianne]

The CEO of failed Washington Mutual Inc., on the job only a few weeks before the largest U.S. thrift was seized by the government and sold to JPMorgan Chase & Co., is entitled to more than $13 million in severance and bonus pay.

[FlingWingFlyer]

$13 mil. for three weeks work. Whadda country!

[OCC]

The board of WaMu reached out to Fishman to replace Kerry Killinger as CEO as the Seattle-based bank was in a downward financial spiral, struggling with cascading losses from soured mortgages.

Blame the idiot board of WaMU, not Fishman.

[vaudine]

The sale should negate the contract. A simple pink slip will do--that is what other people get. Tough, and all that

vaudine

[Bernard]

From the sounds of it, he was entitled to the money as soon as he showed up the first day, or maybe even when he signed the agreement, without actually having to show up at all.

How inconvenient for him that it took so long to pull the plug and find a buyer at the garage sale.

[Bailee]

Bonus for What. Not going bankrupt sooner?

[TheBattman]

And they wonder why there is public backlash including a push to limit CEO pay and bonuses.... IT is these abusive contracts that cause the publicity issues.

[Combat_Liberalism]

How do you define a bonus, anyway? How about a swift kick in the butt on the way out the door? Is that good enough?

[SlapHappyPappy]

Except he has a contract, whereas the typical employee does not. And, like the contract or not, I support contracts being adhered to.

WaMu was a huge mess. I worked there and the events surrounding our lay-off (part of over 3,000 jobs cut) were evidence that the people in charge were fools. Getting anyone to even attempt to fix what Killinger had done was going to take a ton of cash.

[vaudine]

Yes, he contracted, but he did not have to do the work--it was taken out of his hands. The contract has not been written that cannot be broken. Let him be compensated in stock. Give him an IOU. Give him a job with the buyout co. How could he possibly be compensated like that when the co. went under--No! No!

vaudine

[Polybius]

The sale should negate the contract.

Interesting concept: "The sale of a company negates business contracts."

You have a contract with Acme, Inc. that states that Acme, Inc. owes you $13 million.

My company buys Acme, Inc. and I have a legal right to ignore that contract that Acme, Inc. made with you and I tell you to go pound sand.

I end up with 100% of Acme's assets and zero percent of Acme's debt.

By the way, Acme, Inc. was owned by my brother. I will sell the company back to him next week ..... Debt free.

[Mr. Bird]

I'm really sick of the idiotic rants against executive compensation. Every single one is rooted in envy, nothing more. Problem is, this envy is now leading to a public opinion that the government needs to "take control" of the situation.

We are heading for a New Deal piggy-back that will end the American Dream for generations, unless and until people realize the current situation is a banking issue. Blood should be let, and public funds should be spent, but the Democrats are trying to unclog the drain by pouring acid into the pipes.

[BurbankKarl]

Better yet, he was on a plane when the FDIC took over!

[vaudine]

My final word. That contract was for years of leadership, which could not occur because the company went under. I said he should get compensated--perhaps in stock (at the value when he signed on); He could be partialy compensated by the acquiring co. But no way should he get 20 million for 6 weeks or less from a stock company where investors are losing their shirt.

This mindset--and the awarding of such contracts has put these companies at risk. When your company gets taken over, all previous bets are off. You are welcome to your opiniion. The above is my unchanging one.

vaudine

[ari-freedom]

let the shareholders decide compensation, not barney frank

[ari-freedom]

exactly. When freepers sound like commies, it’s all over for America.

[Mr. Bird]

This mindset--and the awarding of such contracts has put these companies at risk.

I would respectfully (really) disagree. It's tempting to zero in on executive pay when things are bad, but it is absolutely irrelevant to a corporation's financial health.

Typically, overall comp and benefits (including the janitors, clerks, salespeople, and whomever else your employing) amount to more than half of a company's annual revenue.

However, there is a rationale behind paying leaders lots of money; as I remarked when AIG tanked: if your company's failure could ultimately result in an unraveling of the global economy, would you pay the top guy a couple hundred grand for his trouble? Do you think you could acquire the talent with than kind of proposal? Companies fail, as do people. Just because someone is envious when an individual gets rich in the process doesn't mean the underlying principles aren't sound.

[Polybius]

My final word. That contract was for years of leadership, which could not occur because the company went under.

Actually, here are the terms of the contract:

Alan Fishman, 62, who replaces ousted chief executive Kerry Killinger, will receive an annual base salary of $1 million, a sign-on bonus of $7.5 million and an annual bonus of 365 percent of his base salary, or of $3.65 million. WaMu declined to comment on the pay package. If he stays for the full year, he'll receive a long-term incentive award of no less than $8 million, according to the Security and Exchange Commission filing. .... If Fishman is fired or resigns as a result of “constructive termination,” he’ll receive a golden parachute within 10 days, worth 2.5 times his current base salary and his annual bonus of the preceding year.

That was the contract.

When your company gets taken over, all previous bets are off.

My brother and I are now drinking beer together and laughing our @sses off about my "take over" of Acme, Inc. and how his $13 million debt to you has now been wiped off the Acme, Inc. books.

You have a fundamental misunderstanding of the difference between a "take over" and a "bankruptcy".

[vaudine]

I do not think executive pay is causal; however, it is criminal if the execs. use the co. as a cash cow and ruin it--Fannie/Freddie i.e.

I have no problem with Halliburton and Cheney, for instance, though the Dems tried to demagogue it.

In some cases, though, as in this particular case, the man does not deserve compensation of 20 million. He already got a sign on bonus of 8 mil. He does not need to be paid 11 more just to buy out a contract. As I stated before, there has never been a contract written that cannot be broken and this one should be at least renegotiated.

I also still think the mindsets of some of these CEOs is harmful--it leads to unmitigated greed and off book pilfering of funds (Enron). Offer a good sign on contract, and a bonus to be paid when and if the exec produces.

vaudine

[Mr. Bird]

I also still think the mindsets of some of these CEOs is harmful--it leads to unmitigated greed and off book pilfering of funds (Enron).

You have my wholehearted agreement that criminal/fraudulent behavior should be punished, not rewarded. But I have not yet heard of Enron-like fraud (which was egregious) in the current cases. Absent that, contracts and agreements should be acknowledged and adhered to. Remember, bad decisions do not necessarily equate to crimes.

I do believe that the Fannie/Freddie mess needs to be explored extensively; my fear is that its tentacles reach too many people in power for any investigation to prove fruitful. Any casual reader of respected publications like National Review understands the issue; and we also know nothing will come of it.