CNN and Money magazine recently ran an interesting article about the brand new CEO of WaMu, Alan Fishman, who took over the reins of the troubled company on September 7th. Since Washington Mutual was taken over by JPMorgan Chase on Thursday, September 25th, Fishman has only been on the job for 18 days. When you add up his salary, all the possible bonuses, and the lump sum severance payment, Fishman could walk away with more than $18 million or $1 million a day for his troubles. If he worked an eight hour day (not the CEOs really do), Fishman earned approximately $125,000 an hour or $2,083 a minute or $34 a second. Rough life, right?
Like most contracts and corporate executives’ agreements, there are many legal clauses and performance metrics involved in the deal. There are still a lot of legal issues that JPMorgan Chase and WaMu have to iron out with respect to Fishman’s deal and how much he will actually take home for his 18 days of hard work. According to CNN, Fishman will probably receive a severance payment of $6.15 million, a signing cash bonus of $7.5 million and 612,500 shares of now worthless WaMu common stock, long term incentive award, base annual salary of $1 million, and other compensation.
Congressmen, American citizens, and radio pundits constantly spout off about how much American CEOs make in severance after they run their companies into the ground. What a lot of people do not realize is that the payouts are mandated by the contract they all signed when they were hired. It is the board of directors of these companies who should be ashamed of the deals they made with these CEOs. They hire these CEOs and other executives and worded their contracts so poorly where they gave them Golden Parachutes no matter what their job performance resulted. What average citizen can perform horribly on the job, ruin their company’s business, tank the company’s stock price, get fired, and still get millions of dollars in severance? No of us could, and it is time for America’s companies to hold their executives to a performance based standard for all compensation. No one should be given a contract that rewards them for ruining investors and employees’ retirement pensions.