 |
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.
I think it’s time to get out the pitchforks and torches….I mean really.
and yet some here have already posted that taxing this guys income that exceeds $250,000 will cost jobs.
HAH! Unchecked capitalism rewards greed and results in this. Interlocking board of directors filled with CEO’s each agreeing to each others employment contracts without any real shareholder review and statutory Board Member protection against lawsuits has made the USA capitalist system a joke==and bankrupt.
This house of cards needs to be thrown out for a new deck.
If going through the Great Depression again would get rid of these useless fucktards, I’d be down with that.
Too many people making waaaaaay too much money for doing nothing at all.
#2 – Mister Mustard – Too many people making waaaaaay too much money for doing nothing at all.
What really bugs me is that when things go bad, they’re not held accountable… wasn’t that the reason they were paid millions in the first place?!
In context, its not the money these guys make that is the most relevant issue. Rather, it is to make this money they are all have short time frame horizons. These excessive salaries divorce them from the long term health of their own companies===THATS WHATS WRONG with these salaries.
Imagine how many conservative rational CEO’s failed to qualify for a stock option bonus and got fired as a result because they would not engage in sub-prime mortages. Yes, there were a few, and most of them did get fired for “not protecting stockholders equity.” And that was true if your planning horizon is the next stock quote, but totally false looking 2-3-4 years down the road.
Systems fail when the motivations put into place are corrupt. Short term success is rewarded in the USA and long term success is punished.
Thats why our financial system has failed and excessive CEO compensation is actually a partial cause of this long with other concomitant similar structural issues.
Wow. A post from McCullough that I actually agree with.
Except for the pitchforks and torches. I want to see all of them in orange prison jumpsuits for the next 40 years amongst the general prison population. I want their assets seized. Then I want the top 50 congressmen and senators who accepted bribes aka campaign donations from these corrupt banks and mortgage companies to join them. Why is Angelo Mozillo a free man? Why is Franklin Raines not being prosecuted?
#3 – Meister
>>What really bugs me is that when things go
>>bad, they’re not held accountable
Not only are they not held accountable when things go bad, they’re showered with rewards. If this guy had to get dressed and go to work every day, his hourly wage would have dropped significantly.
$20,000,000.00 for 17 days work? Assuming he put in 8 hour days, that’s 147,058.82/hr.
So you have a company in trouble, and you’re looking for someone to run it. Think this guy is going to take stock options? How many people want CEO of failed company on their resume?
So you have to pay plenty to get these guys on board. You or me would have done it for 100k sure.
Keeping the signing bonus is one thing, I guess, but accepting a severance bonus when the ink on your new business cards is still wet is ridiculous.
If a hard dollar-cap on CEO pay is not tenable, perhaps basing it on a ratio of highest-to-lowest paid employee in a corporation would at least spread the wealth around a little. Your CEO is so valuable that he deserves $10 million a year? Good – then thanks to his/her great skills there should be enough budgeted for compensation that everyone in the company should benefit.
CEO salaries should be a fixed multiple of the average employees wages. That way the employees benefit from the companies success along with the shareholders and the CEO and the CEO’s salary is kept in check while the regulators, shareholders, and Board of Directors remain catatonic.
Years ago that multiple was 40X but I think in the last 25 years it has gone to 200X. I’d have to look it up.
I’m sure some Harvard Grads would put up with a million per year with all the perqs and the record of having grown a publicly traded company.
Do you idiots think money is the “only” thing that motivates?
>>Do you idiots think money is the “only” thing
>>that motivates?
For people like this guy? Pretty much.
Twenty million dollars after 17 days, and most of us can’t even qualify for health insurance for 90 days.
If this happened at a bank they would arrest both the thief and the teller that handed over the money. Hey, this did happen at a bank!
Book ’em, Dan-o.
If he worked 16 hours a day (and we know he didn’t) he was making $73,529.41 per hour.
That’s more than a lot of people make working a full year ($35.35 per hour * 2080 hours = $73,528.00).
People talk about the oil companies but this greed goes far and wide across our corporate landscape.
I think our corporations are using the same salary model for the executives as our over-paid pro-sports players.
Hey, you can’t blame this guy. He just came on board and the idiotic directors wrote him that asinine employment contract. He can even claim it wasn’t his fault it went under as he just started and the situation was beyond salvation with only a 2 week window to work with.
He will be employed by one of his buddies somewhere else in a couple of weeks.
It’s really sad. No one person is that important to a company.
Don
#15
True, he accepted the job and he shouldn’t be to blame for getting a great deal. Did he have an idea that this result was forthcoming? He was on the job for 17 days. It was close enough for him to have an idea that he wouldn’t be on the job long and we would at least walk away with the signing bonus. He didn’t have to accept the money but he did.
An ethical person wouldn’t have taken the job or at least wouldn’t take the entire payout.
I don’t know that it’s ridiculous to offer it. A last gasp effort to save the company. If he had turned the company around, he’s probably worth 200 million.
#10 “If a hard dollar-cap on CEO pay is not tenable”
It wouldn’t stand up to constitutional challenges.
The best way to do this is for you to start a company, grow it to Fortune 100 size and then hire a CEO that will work for $100k/year and pay the rest of the employees the same amount…
#2
No. They were paid what the market would bear. As the saying goes, “It takes two to tango.” More power to this guy. He managed to get WaMu to sign a dumb contract that was highly in his favor. It is the board that hired him that should be target of ridicule.
If a company were to declare bankruptcy or go out of business entirely, it makes sense to put in a law that limits all payouts to employees (such a law might already exist). However, that would not help in this case. In this situation, the bank was taken over by the government. The entire point of the golden parachute is to dissuade competitors from buying the company.
#11
I can envision a simple solution to get around a law stipulating a cap on executive pay based on a ratio of workers: create a second business to whom your corporation outsources. In this way, none of the low paying workers are actually employed by the company which employs the high paying executives.
This solution is quite common in the contract world to get around the IRS claiming a contractor to be an employee of the company and all the costs that go with it.
For what this person earned:
I could setup 100 people FOR LIFE.
I could give them medical coverage for EVERYTHING.
They wouldnt need to work another DAY. They could get their TEETH and eyes FIXED 2 times a YEAR. They could PROBABLY send there kids(yes, ALL OF THEM) to college..
If you do the numbers also..there is a trick with some of these wages. THEY are the COMPANY, and NOT really considered an employee. So much of the money is NOT taxed, Heavily..
If you are making $20k per year. In 20 years of work, is ONLY $400k – about $125k for tax..I aint ADDED in the MEDICAL coverage, or the cost of FUEL to get to work. In 40 years, you COULDNT EARN whet this person MADE in 1 day..
$30k per year for 20 years, $600k-(tax) $200k, AND YOU STILL couldnt get to 1 days pay in a LIFE TIME.
$40k(Full time $20 per hour), 20 years is about $800k-tax $266, is about $533k, and in 40 years??(IF you could earn ALL of that for 40 years) could get you $1 million dollars..-HOUSEING, BILLS, MEDICAL COPAY, FOOD, FUEL, CARS, KIDS, INSURANCE, SCHOOLS..
But WHO starts at $20 per hour?? WHO is going to HIRE you at $20 per hour..
EVEN as a Graded income, And you START at $10 per hour for the 1st 10 years..In the end you would PROBABLY NEED to be getting $35+ per hour in the LAST 10 years..
So, HOW many would you like to MAKE happy..
1 RICH person..
or
100+ POOR persons..?
Esp, if 100 persons are VOTING??
When you get your ass laid off or become ‘redundant’ or have to scramble for a job because there is someone in the acquiring company that does your job. Think of this guy.
#21 You seem to have a beef with the tax system. Just abolish income tax and we can go back to a pre-depression economy.
Obviously he’s going to give it back.
I’m not going to defend his compensation, but if he was only there 17 days the failure wasn’t his fault. In fact – he my have been the one who helped saved them.
I’ll repeat myself just for those who can learn.
“This guy” sits on other corporate boards. In that role, he selects and compensates other CEO’s who also sit on other corporate boards.
THIS IS A SHELL GAME!!!!!!
A very small group of executive talent votes everyone else in the group excessive compensation and then sits back and gets the same from them.
And any one of you wants to suggest he just negotiated well?
Hah! Like taking candy from a baby. Now that I’ve shot my mouth out, let me go see if I can find what boards he served on.
There should be a google button that would do this corporate linking for us. Its all public information for the time being, just not linked. I’ll only take 10-15 minutes as I haven’t done this before.
Yep==only two listed at the first website found:
Brooklyn Chamber of Commerce Chairman (past)
Brooklyn Navy Yard Development Corporation Chairman
Plus a shitload of political connections.
http://www.nndb.com/people/370/000162881/
Our government is a vipers nest.
#19, Cow-Paddy,
#10 “If a hard dollar-cap on CEO pay is not tenable”
It wouldn’t stand up to constitutional challenges.
What part of regulating wages is unconstitutional? Is this just another one of your “shoot from the hip without thinking about it first” comments?
#20, Thomas,
#11
I can envision a simple solution to get around a law stipulating a cap on executive pay based on a ratio of workers: create a second business to whom your corporation outsources. In this way, none of the low paying workers are actually employed by the company which employs the high paying executives.
If a ratio cap were put in place I would assume this would be covered.
This solution is quite common in the contract world to get around the IRS
And it is usually more expensive to hire a contract worker and opens up other liabilities. The main benefit of contract workers is someone else does the hiring process and weeds out the undesirables. If they are kept on full time, the health insurance kicks in 3 months later.
*
I would think the FDIC would have dissolved the Board of Directors first when taking over the Bank. That they allowed this to happen is just plain wrong.
The subcontracting dodge to avoid workers compensation is well understood.
You can look at flow through arrangements made for the purpose of avoiding regulation. That should also include a jail term instead of a governmental claim that “its too difficult.” Always is, unless you WANT to do your job.
To the claim of any “rights.” Corporations have none except those granted by statutes.
#28 “What part of regulating wages is unconstitutional?”
Start with Article VII. That’ll keep ya busy for a while.
Until the Gov, WRITE up a STANDARDIZED Business plan and structure that ALL business must follow, NOTHING can/will be done.
This is as bad as DEREGULATION of utilities.
THOSE on the top got VERY RICH, and keep increasing RATES to OLD infrastructure.
the STOCK market is a GIANT loan association.
corps should be FORCED not to depend on MONEY from STOCKS..
ALL of us has learned the FUN of borrowing from someone to make ends meet.
THIs 1 person made ENOUGH money to (probably) pay EVERYONE in the Corp (that makes $40k and Under).
#31 “Until the Gov, WRITE up a STANDARDIZED Business plan and structure that ALL business must follow, NOTHING can/will be done.”
Ah yes, the brilliance of a centrally managed economy & 5 year plans. ROFL!
#28
Since the IRS hasn’t been able to get around it, I doubt Congress would. You cannot expect that a corporation would base its wages on those of entirely separate corporation to whom they outsource.
> And it is usually
> more expensive to hire
> a contract worker and
> opens up other liabilities.
It depends on the circumstance of course. While the hourly rate is typically higher, it many cases it is less costly because the corporation does not have to pay for training of the contractor, health benefits, 401ks or even equipment in many cases.