In lieu of the U.S. Treasury’s plan to fund a $700 billion bailout plan, Democrats focus on including controls on executive pay that take advantage of the taxpayers’ aid.
According to RiskMetrics, as several firms, including Citigroup and JPMorgan, which are looking to buyout Washington Mutual, are taking a closer look at the employment contract that the troubled mortgage lender reached on September 7.
Alan H. Fishman has replaced Kerry Killinger as CEO and Fishman will also chair the board’s corporate development committee. Fishman’s contract, which runs though 2011, reflects that WaMu’s directors are willing to pay extensively if they believe the CEO can turn the bank around and lead it through these troubled financial times. According to an 8-K filing on September 11, Fishman’s annual salary is set at $1 million and his annual bonus equals $3.65 million, matching levels of pay Killinger received in 2007. Fishman’s long-term incentives will be determined by the board’s human resources committee and if Fishman stays with the company through 2009, he’s ensured at least $8 million.
If he leaves on his own accord, he will be forced to pay back part of the $7.5 million cash bonus. However, should he be terminated, he is locked into a “golden parachute,” which will allow him a lump-sum cash severance based on 2.5 times the sum of his salary and bonus. Any unvested time-based options would become exercisable and remain so for 12 months.
While the Feds have not taken over WaMu, AIG, which has been taken over by the Fed, allowed former CEO Martin Sullivan to resign with “good reason,” allowing him approximately $19 million in cash termination pay: $15 million severance payment and pro rata bonus of $4 million, according to RM.