Bigger is no longer better and greed is not quite as good. But Kerry Killinger is covered. He acquisitioned the rise of Washington Mutual and ducked out just before its mortgage free fall. Forced into retirement a week ago, the WaMu CEO took his $50-plus million in compensation over the last five years and went home.
His bank's stock, almost $35 a share last year, dropped 88 percent, on par with junk. The mortgage business he staked his career and bank's life on had imploded. Sell, sell, sell he had told his lenders. Find unqualified borrowers and don't ask them to make their payments. Surprise, those were houses of cards. Now the bank itself is on the multiple listings for fixer-upper American financial institutions, cheap.
More than half of the Northwest's 20 best-paid CEOs make at least $4.7 million, the Seattle Times reported last year, a 28 percent increase from the year before. Killinger topped the 2007 list of publicly traded companies with a pay package valued at $18.1 million:
Board members say they need to keep pay competitive or risk losing talented CEOs to companies that do. The result, says Shivaram Rajgopal, is a "Lake Wobegon kind of thing," a reference to Garrison Keillor's "Prairie Home Companion," the folksy radio show about a place "where all the women are strong, all the men are good-looking, and all the children are above average."...Rajgopal, an associate professor of accounting at the University of Washington, [said] "Nobody wants to be paid the average, and pay just keeps creeping up."
After ousting Killinger, the board brought in Alan Fishman, COO of the next-largest thrift, Sovereign Bank, to lift the tide. "I do think I have the skills to take it to the next level," he said. So far what he has done is keep WaMu afloat beneath its for sale sign. But Fishman is covered too. He has a $20 million salary and incentive package, bigger than Killinger's, good for at least one year. It includes a $7.5 million signing bonus which he presumably has already pocketed. If he screws up, he'll still get a golden parachute worth more than $2.5 million. Theoretically, he could quickly sell the bank and walk away flush. It may not be what Lake WaMu investors had hoped for. But it is above average, and apparently that's what matters.