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What's the price of failure? For Washington Mutual Inc. CEO Alan Fishman, it's about $10 million, which is what he stands to collect as reward for presiding over the thrift's collapse, the biggest bank meltdown since time began.
Not that Fishman, a 25-year banking industry veteran (and former senior executive at another distressed financial giant, American International Group Inc.), didn't earn it. He took the job at WaMu, replacing former chief executive Kerry Killinger on Sept. 8. Under his compensation package, Fishman got a $7.5 million cash signing bonus and, assuming his exit is deemed "constructive," is eligible for a payout of 2.5 times his $1 million base salary at WaMu. Amortized over the 16 days Fishman was officially at the helm, that's roughly $625,000 per day. Assuming he worked -- let's be generous -- 16 hours per day, that's about $39,000 per hour. Per minute, that comes out to, oh, you get the picture. Of course, that's chicken feed compared to the $16.7 billion WaMu depositors withdrew from the thrift in the eight days leading up to its seizure by the Federal Deposit Insurance Corp. and subsequent $1.9 billion sale to J.P. Morgan Chase & Co. Fine, history isn't written in advance, and Fishman may not have foreseen that the dominoes tumbling across the financial sector would reach WaMu so quickly. His advocates will point out that WaMu was already tottering like the town drunk by the time he took over. Meanwhile, the evidence linking executive pay to performance is mixed. It's not even that WaMu waited until June of this year, long after it might have made a difference, to take steps to strengthen its corporate governance. Even in age when obscenely lavish CEO pay is routine, something rankles about all this. Statements like the following, drawn from WaMu's announcement of Fishman's hiring, intensify the cognitive dissonance. "WaMu's strong brand and irreplaceable retail banking franchise have enormous potential, especially in today's environment, and I am thrilled to have this opportunity to create value for shareholders," Fishman said. "I look forward to working with WaMu's dedicated management team and talented employees who have done a remarkable job weathering the storm in the housing and mortgage markets. I intend to hit the ground running here in Seattle with a focus on building on WaMu's strengths, addressing its weaknesses and returning the company to profitability as quickly as possible."Certainly, no one can accuse WaMu of not hitting the ground. Perhaps Fishman might borrow a page from former AIG chief Robert Willumstad, who earlier this month refused his $22 million severance package after leaving the insurer after only four months on the job. But beyond the usual sense of outrage over inflated executive comp, what really nags is a sneaking suspicion that things won't change. Even with markets perched on the ledge as lawmakers dicker over the proposed $700 billion bailout, even as the financial landscape convulses, scattering foreclosure notices like confetti, as federal regulators sharpen their knives, as our presidential contenders chant the mantra of "change" while practicing politics as usual, there lurks a fear that the global financial system is too large, too opaque, too interconnected to reform. I took a call Friday from an investor who focuses on Chinese technology companies. That's the future, he said exuberantly. There's money to mint, markets to make. It's open season on IPOs and all manner of financial opportunities, even as the leaves start to brown here in Manhattan. Wall Street may be vanishing (or hibernating) as a place, but it lives on as a pervasive, globalized state of mind. Regulate that. - Alain Sherter See Sept. 7 regulatory filing detailing Fishman's compensation packaged
CategoriesComments
From: The Worried Worker,
Shareholders lose everything, Fishman lands the big one, Killinger sneaks away under cover of night. Fishman is going to make, for 18 days of a job, almost the same amount that Killinger earned in salary in 2007. A teller earns about $17.00 an hour. This is wrong.
Posted on:
September 28, 2008 3:19 PM
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This whole story makes me sick and reminds me that capitalism is a ridiculous, unjust and totally insane economic system and no way to run an economy or a country that is supposodely based on democracy!!!