The age of gold parachutes for CEOs might just be coming to an end. Washington Mutual, the nation’s largest savings and loan, collapsed last week in what was the biggest U.S. bank failure in history. Though the CEO, Alan Fishman, had only been on board for 18 days, based on SEC filings his contract called for a near $12 million severance package.
Yesterday, JPMorgan Chase, which bought virtually all of WaMu’s branches and deposits through a government-brokered sale, announced that Fishman was leaving the company and won’t be getting any fancy severance.
“In any merger, there are redundancies, and we wanted to make a decision quickly,” said Thomas Kelley, spokesman for JPMorgan Chase. Fishman “will not be entitled to severance from JPMorgan.” Nor will Stephen Rotella, WaMU’s chief operating officer, whose contract also says that in the event of a change in company control is entitled to a severance package worth about $12 million. (Fishman isn’t suffering too much. His initial contract called for a $7.5 million signing bonus and a $1 million salary, which WaMu likely paid before the bank went belly up last week.)
There is a chance Fishman could still end up with his severance. According to an analysis by James F. Reda and Associates, an executive compensation consulting firm, Fishman’s employment agreement entitled him to $11.6 million if he was fired without cause or forced to resign.
Kelley, of JP Morgan, declined to comment on whether Fishman might file suit to get his severance.
JPMorgan’s retail bank CEO, Charles Scharf, announced Fishman’s departure in a memo yesterday to WaMu employees. In the memo, Scharf said the company hopes to give every WaMu employee an answer about their job status no later than Dec. 1. Most staff will continue in their roles under JPMorgan, while others will stay through the end of the year.
Fishman, 62, was hired on Sept. 8 to replace Kerry Killinger, who was fired after WaMu's credit rating was cut to junk. Killinger, who had been CEO since 1990, received compensation worth $14.2 million in 2006.