Alan H. Fishman, the CEO of Washington Mutual, will likely be unemployed after only a few weeks on the job. But don’t cry for Fishman. He’s set to walk away with about $18 million in bonuses after his three week stint at the failed savings and loan giant. His “golden parachute” is raising eyebrows, particularly because of his short tenure at WaMu. Washington Mutual was the nation’s largest savings and loan. It was taken over Thursday night by federal bank regulators and then sold to JP Morgan Chase for $1.9 billion. This, as lawmakers continued to work on a $700 billion bailout for bad debt in the financial industry.
According to the Securities and Exchange Commission, Washington Mutual gave Fishman a $7.5 million bonus when it hired him on Sept. 8, and guaranteed him $11.6 million in severance if he was terminated, the so-called “golden parachute” that has created controversy when failed executives walk with huge rewards. Fishman also was eligible for annual bonuses of up to 365 percent of his annual base pay of $1 million to go with 615,000 of shares of now nearly worthless company stock. The fact that WaMu failed, however, can’t be blamed on Fishman considering the length of his employment and that he was brought in specifically because the company was in already in trouble.
There remains a possibility that Fishman may decline his severance money from Washington Mutual, as did Robert Willumstad, former chief executive officer of insurance giant AIG. When AIG was bailed out by a 85 billion dollar loan from the government the Willumstad said he wouldn’t take the nearly 22 million golden parachute he could have gotten after just three months on the job.
Willumstad sited the money lost by investors and employees of the insurance giant as his reason for declining the payout. Fishman may also forfeit his bonus or he may work out a deal with JP Morgan to remain on the job. Lawmakers have been wrangling over ways to keep federal bailout money from being used to finance golden parachutes for executives who are seen as the cause of financial meltdown.