CEO made over $50 mil in 5 years, while everyone else loses:
WaMu Wipeout: 'Gross Mismanagement' by Former CEO Killinger
Posted Sep 26, 2008 12:52pm EDT by Aaron Task in Investing, Newsmakers, Recession, Banking
Related: WM, JPM, BAC, C, XLF, WFC, WB
Washington Mutual paid former CEO Kerry Killinger $14.4 million in 2007 and over $54 million from 2002-07, Forbes reports. In return, the nearly 120-year-old firm was led into the biggest bank failure in U.S. history.
Under Killinger's watch, WaMu rushed headlong into toxic mortgage-backed products like option-ARMs, which contributed mightily to the company's epic failure. Thursday evening, the Federal Deposit Insurance Co. seized Washington Mutual's assets and then quickly sold most of the firm to JPMorgan, effectively wiping out the thrift's shareholders and debt holders in the process.
Also vaporized: The $7 billion investment TPG made in WaMu last spring -- after Killinger declined an $8 per share offer from JPMorgan, which might have looked low then but sure as heck beats zero.
"Gross mismanagement" is how Henry Blodget describes Killinger's oversight of the company. I'm sure many of WaMu's investors, employees and depositors would prefer terms unsuitable for publication, especially when they learn current WaMu CEO Alan Fishman is entitled to $11.6 million in cash severance and to keep his $7.5 million signing bonus, The New York Times reports. (Not bad for about three weeks of work.)
Meanwhile, the fact JPMorgan took an immediate $31 billion write-down of WaMu's loan portfolio -- and raised $10 billion via an equity offering -- has major implications for how other banks are valuing their assets (and liabilities), as Henry and I discuss in the accompanying video.
finance.yahoo.com |
